Question

The _______________ is drawn as a horizontal line because _____________ will be determined by the buying...

The _______________ is drawn as a horizontal line because _____________ will be determined by the buying power of other countries and thus do not change with the size of the domestic economy.

A.

consumption function; consumption
B.

investment function; investments
C.

export function; exports
D.

income function; income
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Homework Answers

Answer #1

Ans. Correct Option is B.Export function , and exports

Explationation -

Export level of the country changes with the changes in the real GDP of the country. Horizontal line does not mean that exports stays the same or don't change , on the graph the horizontal axis shows the country's domestic production and which is shaped because of the aggregate demand in other countries. More demand means the horizontal line will move up and vice versa.

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