If net exports are negative, spending by households, firms, and government must be greater than the income people earn in producing GDP.

Question

Quizplus · Accepted Answer

Net exports represent the difference between exports (spending by foreign entities on goods and services produced domestically) and imports (spending by domestic entities on goods and services produced abroad). If net exports are negative, it means that imports exceed exports, indicating that domestic spending (by households, firms, and government) is greater than the income earned in producing GDP.

If Net Exports Are Negative, Spending by Households, Firms, and Government