The net-export effect works like this: A higher price level increases the relative price of domestic exports to other countries while decreasing the relative price of foreign imports from other countries. This results in a decrease in exports and an increase in imports and thus a decrease in net exports.

Higher real interest rates reduces aggregate expenditure by increasing the cost of loans while increasing the earnings from savings. Both factors reduce expenditures by reducing consumption and investments, and therefore, aggregate expenditure.

The interest rates decrease which causes the public to hold higher real balances. This stimulates aggregate demand, which increases the equilibrium level of income and spending. Likewise, if the monetary supply decreases, the demand curve will shift to the left.

An increase in consumer confidence causes an increase (rightward shift) of the aggregate demand curve. A decrease in consumer confidence causes a decrease (leftward shift) of the aggregate demand curve. If buyers find that they “like” a good less, then their demand decreases.

It’s another to say causation, that exporting causes higher wages.” “You have to be careful with movements in wages,” he adds. “They can come from existing workers making more money, or they can come from a shift from less skilled to more highly skilled, and thus higher wage, workers.

The availability of high skill laborers at a low cost has increased the rate of globalization in the 20th and 21st centuries because multinational corporations find it beneficial to hire workers at the lowest cost and people with skills and education in less developed countries want jobs that will bring them more …