Suppose That a Change in Trade Policies Leads to a $20

question 43

Multiple Choice

Suppose that a change in trade policies leads to a $20 billion increase in net exports. If the value of the multiplier is 2, what is the size of the shift in the aggregate demand after Jthe multiplier process works through the economy?

• A) $40 billion
• B) Less than $20 billion
• C) More than $40 billion
• D) Cannot be determined without information on the trade policies in question

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