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Fall in aggregate demand will result in rise in trade deficit.
Answer is True
Can you please explain how rise in trade deficit ?? Trade deficit is more import then export right?Aggregate demand is the total demand for all finished goods and services produced in an economy.
Aggregate demand = Consumption + Investment + Government spending + Net exports
If aggregate demand falls then if consumption, investment and government spending stay the same, net exports fall and might eventually become an increasing deficit.
It’s a matter of what causes what: a bigger deficit means that a country is relying more on imports, but these are not produced n the economy – they are made elsewhere.
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