If Net Exports Increase by $10 Billion and the MPC

question 57

Multiple Choice

If net exports increase by $10 billion and the MPC to 0.6,what will the resulting increase in the consumption component of AD be?

• A)$25 billion
• B)$15 billion
• C)$6 billion
• D)$4 billion

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Definitions:

Market Price

The price at which an asset or service is currently being traded in a given market.

Supply Curve

A graphical representation of the relationship between the price of a good or service and the amount that suppliers are willing to offer for sale, typically upward sloping because higher prices incentivize more production.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price during a specific time period.

Quantity Demanded

The aggregate quantity of a product or service that buyers are ready and capable of buying at a particular price point.