How does an increase in foreign consumer income affect domestic aggregate expenditures and demand? I need to explain and show diagram. I am...

If foreign consumer income rises then domestic aggregate expenditures and demand will, all other things being equal, rise.  The reason for this is that foreign demand for imports will rise.

Let us say that we are using the United States as the “domestic” country.  People in countries like Japan, Canada, Germany, and China will be willing to buy some amount of imports from the United States.  Now imagine that the incomes of those people in...

If foreign consumer income rises then domestic aggregate expenditures and demand will, all other things being equal, rise.  The reason for this is that foreign demand for imports will rise.

Let us say that we are using the United States as the “domestic” country.  People in countries like Japan, Canada, Germany, and China will be willing to buy some amount of imports from the United States.  Now imagine that the incomes of those people in foreign countries increase.  Those people will now be able to afford more imports from the United States.

When the foreigners are able to demand more products that were made in the United States, aggregate demand in the US will rise.  One of the parts of aggregate demand is net exports.  This is the value of the goods the US exports minus the goods it imports.  If foreigners buy more goods made in the US, the value of US net exports will rise.  This will increase the US’s aggregate demand.  Thus, an increase in foreign consumers’ incomes will lead to an increase in US domestic aggregate demand.