Other things equal, when Europeans want to buy more grains from the United States:
A) U.S. imports will increase.
B) European exports will increase at every level of domestic income.
C) U.S. exports will increase at every level of domestic income.
D) the U.S. balance of payments will show a deficit.
E) U.S. consumption spending will fall.

Question

Quizplus · Accepted Answer

When Europeans want to buy more grains from the United States, the demand for U.S. exports of grains will increase, which will result in an increase in U.S. exports at every level of domestic income. This will lead to an improvement in the U.S. balance of payments as the country will earn more from exports than it spends on imports.

Other Things Equal, When Europeans Want to Buy More Grains