According to the International Trade Effect, Holding Everything Else Unchanged

question 31

Multiple Choice

According to the international trade effect, holding everything else unchanged,

• A)an increase in net exports shifts the aggregate demand curve to the right.
• B)an increase in the domestic price level reduces net exports leading to a movement along the aggregate demand curve.
• C)an increase in the exchange rate shifts the aggregate demand curve to the right.
• D)an increase in the prices of foreign goods level reduces imports leading to a movement along the domestic economy's aggregate demand curve.

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Definitions:

Variable Cost

Costs that change in proportion with the level of output or production activity.

Fixed Costs

Overheads such as rent, salaries, and insurance that do not fluctuate with the level of goods produced or sold.

Variable Costs

Charges that vary in relation to the volume of output or services provided by a firm.

Fixed Costs

Expenses that do not change regardless of the level of production or business activity, such as rent, salaries, and insurance.