When total planned real expenditures change due to the changes in net exports, this is known as the
A) interest rate effect.
B) real-balance effect.
C) open economy effect.
D) aggregate balances effect.

Question

Quizplus · Accepted Answer

The change in net exports affects total planned real expenditures in an open economy. As a result, this is known as the open economy effect. The interest rate effect and real-balance effect refer to changes in consumption and investment due to changes in interest rates and wealth, respectively. The aggregate balances effect is not a commonly used term in macroeconomics.

When Total Planned Real Expenditures Change Due to the Changes