When the incomes of a major trading partner increase, what effect does it have on aggregate demand in the U.S.?

When the incomes of a major trading partner increase, it generally leads to an increase in aggregate demand in the U.S. This occurs primarily because higher incomes in the trading partner's economy mean that consumers there have more purchasing power. As a result, they are likely to buy more goods and services, including those imported from the U.S.

This increase in demand for U.S. exports contributes directly to the aggregate demand in the U.S. economy. When exports rise, businesses may respond by increasing production, which can lead to more job creation and further economic activity. The overall impact is a shift in the aggregate demand curve to the right, reflecting that at every price level, the total quantity of goods and services demanded in the economy has risen due to enhanced foreign demand driven by higher incomes.

Thus, it is evident that a rise in the incomes of a major trading partner has a positive effect on U.S. aggregate demand, reinforcing the chosen answer.