If Net Exports Increase by $400 Billion at Every Level

question 12

Multiple Choice

If net exports increase by $400 billion at every level of income, the aggregate expenditure line will

• A)shift upward by $400 billion
• B)shift downward by $400 billion
• C)shift upward by more than $400 billion because of the multiplier effect
• D)shift upward by less than $400 billion
• E)shift downward by more than $400 billion because of the multiplier effect

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Definitions:

Fixed Cost Element

The portion of total costs that does not change with the variation in activity level or production volume.

CVP Analysis

Cost-Volume-Profit Analysis, a tool used to determine how changes in costs and volume affect a company's operating income and net income.

Variable

An element, feature, or factor that is likely to vary or change in ways that can affect the outcome of research or experiments.

Fixed

Typically refers to costs or assets that remain constant and do not vary with the level of activity or production.