An increase in net exports due to higher foreign incomes can boost aggregate demand. Factors like consumer wealth and lower interest rates can also increase aggregate demand. Conversely, factors like household indebtedness or reduced net exports can negatively impact aggregate demand.
An increase in net exports due to higher foreign incomes can lead to a shift in the aggregate demand curve to the right. As foreign demand for domestic products rises, firms hire more workers, increasing incomes and consumption.
An increase in consumer wealth and a decrease in interest rates are factors that can boost aggregate demand. Higher consumer wealth leads to increased spending, while lower interest rates encourage borrowing and spending.
Factors like an increase in household indebtedness, a decrease in net exports, or a decrease in government spending are likely to have a negative impact on aggregate demand.
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