Which of the following factors is not assumed constant along the U.S. net export function?
A)U.S. price levels and foreign price levels
B)interest rates in the U.S. and abroad
C)exchange rates between the U.S. and other currencies
D)foreign income levels
E)income levels in the U.S.

Question

Quizplus · Accepted Answer

The U.S. net export function assumes that foreign income levels, exchange rates, interest rates, and prices levels (both in the U.S. and abroad) are constant. However, changes in U.S. income levels can affect the demand for foreign goods and services, which in turn affects net exports. Therefore, income levels in the U.S. are not assumed constant along the U.S. net export function.

Which of the Following Factors Is Not Assumed Constant Along