An increase in net exports will shift the
A) aggregate expenditures curve upward and the aggregate demand curve rightward.
B) aggregate expenditures curve upward and the aggregate demand curve leftward.
C) aggregate expenditures curve downward and the aggregate demand curve rightward.
D) aggregate expenditures curve downward and the aggregate demand curve leftward.

Question

Quizplus · Accepted Answer

An increase in net exports means that there is an increase in the amount of exports relative to imports. This means that there is an increase in spending by foreign countries on domestic goods, which will lead to an increase in aggregate expenditures. This increase in aggregate expenditures will shift the aggregate expenditures curve upward. In addition, an increase in exports will also lead to an increase in real GDP, which will lead to an increase in aggregate demand, shifting the curve rightward. Therefore, both the aggregate expenditures curve and the aggregate demand curve will shift upward and rightward.

An Increase in Net Exports Will Shift the