Figure 36-9

-Figure 36-9 shows aggregate expenditures when net exports are fixed and aggregate expenditures are variable.The autonomous spending multiplier is
A)smaller when net exports are fixed.
B)smaller when net exports are variable.
C)larger when net exports are variable.
D)the same whether net exports are fixed or variable.

Question

Figure 36-9
​  ​
-Figure 36-9 shows aggregate expenditures when net exports are fixed and aggregate expenditures are variable.The autonomous spending multiplier is
A)smaller when net exports are fixed. 
B)smaller when net exports are variable. 
C)larger when net exports are variable. 
D)the same whether net exports are fixed or variable.

Quizplus · Accepted Answer

The autonomous spending multiplier is smaller when net exports are variable because a change in autonomous spending will not have as large of an impact on aggregate expenditures due to the offsetting effects of changes in net exports. In contrast, when net exports are fixed, a change in autonomous spending will have a larger impact on aggregate expenditures, making the autonomous spending multiplier larger.

Figure 36-9 ​ ​

Figure 36-9