Ceteris paribus, how does a recession in the United States affect U.S. net exports?
What will be an ideal response?
As GDP decreases in the United States due to the recession, the incomes of households fall. Households respond by lowering their purchases of goods and services. Some of the decline in purchases includes domestic goods and services; some of the decline includes foreign produced goods and services. This essentially lowers imports. Assuming that exports do not change, net exports will rise.
You might also like to view...
When you have a job and your employer compensates you for your time with money, resulting in both of you being better off, it is an example of a voluntary exchange
Indicate whether the statement is true or false
In the short-run, a temporary increase in money supply
A) shifts the DD curve to the right, increases output and appreciates the currency. B) shifts the AA curve to the left, increases output and depreciates the currency. C) shifts the AA curve to the left, decreases output and depreciates the currency. D) shifts the AA curve to the left, increases output and appreciates the currency. E) shifts the AA curve to the right, increases output and depreciates the currency.
Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output. How would this affect the arguments of those who oppose using policy to stabilize output?
The law of diminishing marginal product is NOT responsible for the shape of
A. the average variable cost curve. B. the total cost curve. C. marginal cost curve. D. total fixed cost curve.