Net exports ________ the autonomous expenditure multiplier.
A)reduce
B)increase
C)A or B
D)have no effect on

Question

Quizplus · Accepted Answer

Net exports (exports minus imports) reduce the total amount of autonomous expenditure, thus reducing the magnitude of the autonomous expenditure multiplier. If there is a decrease in net exports, for example, there will be a proportional decrease in the overall level of economic activity. Conversely, an increase in net exports would increase the overall level of activity.

Net Exports ________ the Autonomous Expenditure Multiplier