Final answer:
A decrease in Japanese income would likely lead to a decrease in foreign demand for U.S goods, thus reducing the United States' aggregate demand. This could cause a lower price level and real GDP in the U.S economy. The correct option is 2.
Step-by-step explanation:
The impact of a decrease in Japanese income on aggregate demand in the United States can be understood by looking at the determinants of aggregate demand and the global economic interconnectivity.
If Japanese income decreases, there will likely be a decrease in foreign demand for U.S goods and services, as Japanese consumers and businesses will have less income to spend on imports. This decreased demand from a major foreign market would, in turn, lead to a reduction in U.S aggregate demand, resulting in a potentially lower price level and real GDP in the United States due to the decrease in exports.
Such a scenario highlights that even a large economy like that of the United States, which has a significant Gross Domestic Product (GDP) and seems to be less vulnerable to international pressures, can be affected by economic changes in other countries. When a nation that imports a substantial amount of U.S. goods, like Japan, experiences an economic downturn, it can negatively influence the U.S. economy by reducing the aggregate demand within the U.S.
Hence, Option 2 is correct.