Consider the AE Function in a Simple Macro Model with Government

question 67

Multiple Choice

Consider the AE function in a simple macro model with government and foreign trade.It is generally assumed that as real national income

• A)increases,exports will decrease.
• B)increases,net exports will decrease.
• C)increases,imports will decrease.
• D)decreases,net exports will decrease.
• E)decreases,exports will decrease.

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Definitions:

Cash Discount

A reduction in the invoice price offered by sellers to buyers as an incentive for early payment.

Invoice Date

The date on which an invoice is issued, marking the beginning of the period in which payment is expected according to the terms of sale.

Profit Margin Ratio

A financial metric used to assess a company’s profitability by comparing net income to revenue.

Gross Profit Ratio

The proportion of money left over from revenues after accounting for the cost of goods sold.