Exports Are Added To, and Imports Are Subtracted From, Aggregate

question 174

True/False

Exports are added to, and imports are subtracted from, aggregate expenditures in moving from a closed to an open economy.

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Definitions:

Interest Payments

The amount paid by a borrower to a lender as compensation for the use of borrowed funds, usually calculated as a percentage of the principal amount.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits that could have been received but were given up.

Explicit Cost

Direct, out-of-pocket payments for resources employed in the production of goods or services.

Marginal Cost

The additional cost incurred by producing and selling one more unit.