If net exports decrease from zero to some negative amount, the aggregate expenditures schedule would:
A)shift upward.
B)shift downward.
C)not move (net exports do not affect aggregate expenditures).
D)shift upward or downward, depending on whether the negative net exports resulted from a decline in exports or an increase in imports.

Question

Quizplus · Accepted Answer

Net exports are a component of the aggregate expenditures equation (AE = C + I + G + NX), so if net exports decrease from zero to a negative amount, this means that total aggregate expenditures will decrease. This will result in a downward shift of the aggregate expenditures schedule.

If Net Exports Decrease from Zero to Some Negative Amount