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

question 139

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
The 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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Definitions:

Neuron

A cell of the nervous system responsible for transmitting information through electrical and chemical signals.

Dendrites

Branched extensions of a neuron that receive signals from other neurons.

Axon

A long, slender projection of a nerve cell, or neuron, that conducts electrical impulses away from the neuron's cell body to other neurons, muscles, or glands.

Local Potential

Small changes in membrane potential that are localized and can lead to the generation of an action potential if threshold is reached.