The table below shows national income and imports.The level of exports is fixed at $300.All figures (in table and questions)are in millions of dollars.
TABLE 22-1
-Refer to Table 22-1.On a graph of the net export function for this economy,at what level of Y would the NX function intersect the horizontal axis?
A)at $0
B)at $2000
C)at $3500
D)at $4000
E)at $5000

Question

The table below shows national income and imports.The level of exports is fixed at $300.All figures (in table and questions)are in millions of dollars.
  TABLE 22-1
-Refer to Table 22-1.On a graph of the net export function for this economy,at what level of Y would the NX function intersect the horizontal axis?
A)at $0 
B)at $2000 
C)at $3500 
D)at $4000 
E)at $5000

Quizplus · Accepted Answer

The net export function is NX = Exports - Imports.
Given that Exports are fixed at $300 million, the net export function reduces to NX = $300 - Imports.
At the level of income where the net export function intersects the horizontal axis, net exports are zero. This occurs when imports are equal to exports, i.e. $300.
Therefore, $300 = $300 - Imports which imply Imports = $0.
So, total income (Y) at this level would be $3500, as shown in the table. Hence, the NX function intersects the horizontal axis at $3500.

The Table Below Shows National Income and Imports