A decrease in real disposable income will
A)shift the autonomous net export function upward
B)shift the autonomous net export function downward
C)cause a rightward movement along the autonomous net export function
D)cause a leftward movement along the autonomous net export function
E)show no movement along or shift of the autonomous net export function

Question

Quizplus · Accepted Answer

A decrease in real disposable income will lead to a decrease in purchasing power, which means individuals and firms will buy fewer goods and services. This will result in a decrease in the demand for foreign goods, causing a decrease in net exports. Therefore, there will be a leftward movement along the autonomous net export function.

A Decrease in Real Disposable Income Will