An economy that engages in international trade will have a steeper aggregate expenditure line than one that is the same in all other respects, except for the absence of international trade.

Question

Quizplus · Accepted Answer

International trade can affect the slope of the aggregate expenditure line, but it does not necessarily make it steeper. The slope depends on the marginal propensity to consume domestically and abroad, and other factors like exchange rates and trade policies.

An Economy That Engages in International Trade Will Have a Steeper