Answer to Question #228803 in Macroeconomics for Will

Question

With the aid of a diagram and using the Keynesian analysis, explain in detail how

income and aggregate spending are affected by the following

Answer 1

When there is changes in the level of domestic price, this may affect both aggregate and income spendings. The higher level of prices level makes States' imports to rise as exports fall which increases both income and expenditure spendings.