If Net Exports Increase by $350 Billion at Every Level

question 2

Multiple Choice

If net exports increase by $350 billion at every level of income, the net export line will

• A)shift upward by $350 billion
• B)shift downward by $350 billion
• C)shift upward by more than $350 billion because of the multiplier effect
• D)shift upward by less than $350 billion
• E)shift downward by more than $350 billion because of the multiplier effect

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Definitions:

Inventory Investment

The stock of unsold goods held by a company during a given period, indicating the level of production that goes into inventories.

Gross Investment

represents the total amount spent on purchases of new capital and on replacing depreciated capital within an economy during a specified period.

Capital Stock

The total amount of physical, financial, and human assets used in the production of goods and services in an economy.

Proprietorships

Businesses owned and operated by a single individual, bearing full responsibility for its assets and liabilities.