Question

what effect does an increase in exports have? a. it leads to an even larger increase...

what effect does an increase in exports have?

a. it leads to an even larger increase in equilibrium income

b. it leads to an even larger decrease in equilibrium income

c. it leads to a smaller increase in equilibrium income

d. it leads to a smaller decrease in equilibrium income

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans- a) it leads to an even larger increase in equilibrium income.

Solution- Suppose there is an increase in exports so that export curve shifts upward from X0 to X1. From the figure below, it can be seen that the equilibrium income increases to Y1. Thus, increase in exports (ΔX) leads to the increase in income (ΔY) which is larger than change in exports (ΔX).

If you found the answer helpful, please upvote the same. It will help me serve you better!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following best describes the multiplier process? A.  A decrease in exports leads to a...
Which of the following best describes the multiplier process? A.  A decrease in exports leads to a reduction in taxes, which causes government spending to fall. B.  An increase in interest rates leads firms to cut their investment spending. That causes expectations of future profits to worsen, which leads to even more cuts in investment spending. C.  A decline in net exports leads firms to reduce their investment spending, which raises interest rates and causes further reductions in investment spending. D.  A decrease in...
when the price of an inferior good falls, the substitution effect leads to.................. in the quantity...
when the price of an inferior good falls, the substitution effect leads to.................. in the quantity purchased, and the income effect leads to......................... in the quantity purchased. A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease which one is the right answer?? and why? GIVE EXAMPLE PLEASE
1.If the substitution effect is larger than the income effect, what will be the labour-supply response...
1.If the substitution effect is larger than the income effect, what will be the labour-supply response to an increase in the income-tax rate? (Recall that income taxes are a percent of income, not a fixed sum.) A. Labor supply will remain unchanged. B. Labor supply will change ambiguously. C. Labor supply will increase. D. Labor supply will decrease. 2. Suppose your firm produces according to a function in which capital and labour are perfect compliments. The wage rate is currently...
Which of the following statements is correct? Group of answer choices a, An increase in exports...
Which of the following statements is correct? Group of answer choices a, An increase in exports will tend to increase, and an increase in imports will tend to decrease, the equilibrium GDP. b. An increase in exports and an increase in imports will both tend to increase the equilibrium GDP. c. An increase in exports and an increase in imports will both tend to decrease the equilibrium GDP. d. An increase in exports will tend to decrease, and an increase...
Which of the following best describes the multiplier process? A. A decrease in investment spending leads...
Which of the following best describes the multiplier process? A. A decrease in investment spending leads to a decrease in disposable income, which causes consumers to reduce their spending. B. A decline in net exports leads firms to reduce their investment spending, which raises interest rates and causes further reductions in investment spending. C. A decrease in exports leads to a reduction in taxes, which causes government spending to fall. D. An increase in interest rates leads firms to cut...
QUESTION 52 A decrease in U.S. interest rates leads to a. a depreciation of the dollar...
QUESTION 52 A decrease in U.S. interest rates leads to a. a depreciation of the dollar that leads to smaller net exports. b. a depreciation of the dollar that leads to greater net exports. c. an appreciation of the dollar that leads to greater net exports. d. an appreciation of the dollar that leads to smaller net exports. 1 points    QUESTION 53 As the price level falls, a. the exchange rate rises, so net exports fall. b. the exchange...
1. If the multiplier is 6 and exports decrease by $30, what impact will that have...
1. If the multiplier is 6 and exports decrease by $30, what impact will that have on aggregate expenditure?            A) decrease by $180        B) increase by $180 C) increase by $30            D) decrease by $30 2, An increase of the tax on business income will reduce aggregate demand because           A) consumption spending will fall              B) government spending will fall C) investment spending will fall                 D) wages will increase 3. Saving equals A) disposable income...
1. A. Suppose excellent weather leads to a larger than normal tomato crop. If there is...
1. A. Suppose excellent weather leads to a larger than normal tomato crop. If there is a relatively small change in price compared to the change in quantity resulting from this large crop, what does this imply about the price elasticity of demand for tomatoes? it is relatively elastic it is relatively inelastic it is perfectly elastic it is perfectly inelastic b. If the price elasticity of demand for tomatoes is -1.25 and quantity changes by 3% due to this...
When a company acquires treasury stock, what effect does this transaction have on earnings per share...
When a company acquires treasury stock, what effect does this transaction have on earnings per share and legal capital, respectively? a. increase, none b. increase, decrease c. decrease, decrease d. decrease, increase
Which is likely to have the larger effect on the CPI, a 2 percent increase in...
Which is likely to have the larger effect on the CPI, a 2 percent increase in food or a 3 percent increase in diamond rings? Explain.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT