An increase in net exports leads to an increase in real national income.Further,

Question

Quizplus · Accepted Answer

An increase in net exports means that more goods and services are being sold abroad, which means that there is an increase in demand for domestic production. This leads to an increase in real national income, which in turn leads to an increase in consumption spending and saving. This is because people have more income to spend and save. Option B is not correct as an increase in income typically leads to increase in savings. Option C is incorrect, as an increase in net exports should lead to an increase in investment spending due to increased demand. Option D is incorrect as there is no reason for government spending to decrease in response to an increase in net exports.

An Increase in Net Exports Leads to an Increase in Real