In a hypothetical country, the population is expected to increase by 25% following recent legislation relaxing the barriers that restrict immigration. It is expected that the new immigrants will purchase the same goods and services as the current population does. If all other economic forces are held constant, how would this increase in population influence demand?
The increase in population by 25% due to relaxed immigration barriers would lead to an increase in demand for goods and services in the hypothetical country. This is because the new immigrants are expected to purchase the same goods and services as the current population.
With a larger population, there would be a higher demand for housing, consumer goods, food, healthcare services, transportation, and various other products and services. This increased demand could lead to a boost in economic activity and potentially stimulate the economy.
Furthermore, the increased population may also create opportunities for businesses to expand and cater to the growing demand. Retailers, manufacturers, service providers, and other businesses may need to increase their production or open new locations to meet the needs of the larger population.
Overall, the increase in population resulting from relaxed immigration barriers would likely have a positive impact on demand for goods and services in the hypothetical country.