The Inclusion of a Strong Negative Correlation Between Net Exports

question 45

Multiple Choice

The inclusion of a strong negative correlation between net exports and GDP in the definition of aggregate demand serves

• A) to make the IS curve steeper in direct opposition to the effect of the correlation between net exports and the exchange rate.
• B) to make the IS curve flatter in direct opposition to the effect of the correlation between net exports and the exchange rate.
• C) to amplify the effect of the correlation between net exports and the exchange rate in making the IS curve steeper.
• D) to amplify the effect of the correlation between net exports and the exchange rate in making the IS curve flatter.
• E) none of the above.