A decrease in the value of exports minus imports will
A) lower equilibrium GDP.
B) lead to a decline in net investment.
C) lead to a decline in the 45-degree line.
D) shift the total intended spending line upward.
E) lower the value of the multiplier.

Question

Quizplus · Accepted Answer

An decrease in the value of exports minus imports means that there are fewer net exports, which are a component of aggregate demand. This can lead to a decrease in equilibrium GDP, as aggregate demand will decrease as a result.

A Decrease in the Value of Exports Minus Imports Will