An Increase in Net Exports Will Shift the AD Curve

question 162

Multiple Choice

An increase in net exports will shift the AD curve to the

• A) left by a multiple of the change in net exports.
• B) left by the same amount as the change in net exports.
• C) right by the same amount as the change in net exports.
• D) right by a multiple of the change in net exports.

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Definitions:

Crossover Rate

The crossover rate is the rate of return at which two projects have the same net present value (NPV), used in capital budgeting to compare the desirability of investments or projects.

Profitability Index

A financial tool used to evaluate the attractiveness of an investment by dividing the present value of future cash flows by the initial investment cost.

Rate Of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment’s cost.

Required Return

The lowest profit anticipated by an investor from a specific asset or project investment.