Which of the following is true of exports as a component of aggregate demand?
A) If exports are greater than imports, the economy has a trade deﬁcit.
B) Exports increase the economy's leakages and reduce the size of the multiplier.
C) Exports are independent of the domestic economy's level of income.
D) As income levels increase, an economy moves from a trade surplus to a trade deﬁcit.

Question

Quizplus · Accepted Answer

Exports are considered independent of the domestic economy's level of income because they are determined by foreign demand for domestic goods and services, not by the domestic economy's income levels.

Which of the Following Is True of Exports as a Component