$$\begin{array} { | c | c | c | c | c | c | c | }
\hline \text { Price Level } & C & I _ { g } & G & X & M & \text { Real GDP } \
\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \
\hline 125 & 20 & 4 & 3 & 2 & 4 & \
\hline 122 & 22 & 6 & 3 & 3 & 3 & \
\hline 119 & 24 & 8 & 3 & 4 & 2 & \
\hline 116 & 26 & 10 & 3 & 5 & 1 & \
\hline
\end{array}$$ In the accompanying table for a particular country, C is consumption expenditures, $$I _ { g }$$ is gross
Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures
Are in billions of dollars. If this nation's equilibrium price level is 125, its net exports will be
A) minus $4 billion.
B) minus $2 billion.
C) zero.
D) $2 billion.

Question

$$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \text { Price Level } & C & I _ { g } & G & X & M & \text { Real GDP } \
\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \
\hline 125 & 20 & 4 & 3 & 2 & 4 & \
\hline 122 & 22 & 6 & 3 & 3 & 3 & \
\hline 119 & 24 & 8 & 3 & 4 & 2 & \
\hline 116 & 26 & 10 & 3 & 5 & 1 & \
\hline
\end{array}$$ In the accompanying table for a particular country, C is consumption expenditures, $$I _ { g }$$ is gross
Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures
Are in billions of dollars. If this nation's equilibrium price level is 125, its net exports will be
A) minus $4 billion.
B) minus $2 billion.
C) zero.
D) $2 billion.

Quizplus · Accepted Answer

Net exports (NX) = X - M 
At a price level of 128, NX = 1 - 5 = -4
At a price level of 125, NX = 2 - 4 = -2
At a price level of 122, NX = 3 - 3 = 0
At a price level of 119, NX = 4 - 2 = 2
At a price level of 116, NX = 5 - 1 = 4

Since the equilibrium price level is 125, the corresponding net exports is -$2 billion. Therefore, the correct answer is B, minus $2 billion.

In the Accompanying Table for a Particular Country, C Is