Economics · Macroeconomics
Consider the following statements about the impact of foreign trade on aggregate demand in India: Statement 1: Imports by Indian consumers act as a leakage from the circular flow of income hence reducing aggregate demand. Statement 2: Exports from India to foreign markets act as an injection into the circular flow, increasing aggregate demand.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Neither Statement 1 nor Statement 2 is correct
- 2Both Statement 1 and Statement 2 are correct✓
- 3Only Statement 2 is correct
- 4Only Statement 1 is correct
Correct answer
Both Statement 1 and Statement 2 are correct
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