If net exports are positive,
A) the equilibrium GDP must be greater than the full-employment GDP.
B) imports must exceed exports.
C) aggregate expenditures are greater at each level of GDP than when net exports are zero or negative.
D) some other component of aggregate expenditures must be negative.

Question

Quizplus · Accepted Answer

When net exports are positive, it means that a country is exporting more than it is importing. This leads to an increase in aggregate expenditures, as foreign buyers are paying for more domestic goods and services, resulting in increased production and GDP. Therefore, aggregate expenditures are greater at each level of GDP than when net exports are zero or negative.

If Net Exports Are Positive