Determine the term - real income effects, Business Law and Ethics

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Determine the term - Real Income Effects

This linkage between countries takes place through the current account of the balance of payments. It occurs when a change in one country's national income increases its demand for imports from another country. This will stimulate aggregate demand in the overseas country, and alter its level of economic welfare. The size of this spillover effect will depend crucially on the marginal propensity to import.

 


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