Which of the following is true concerning the impact of net exports in the model with AE = C + I + NX + G?
A)Net exports are a leakage from the economy if imports exceed exports.
B)Net exports are always positive.
C)Net exports are negative because exports are assumed to be autonomous.
D)Net exports must be negative if planned investment is positive.
E)Net exports are an injection into the economy if imports equal exports.

Question

Quizplus · Accepted Answer

In the model with AE = C + I + NX + G, net exports represent the difference between exports and imports. If imports exceed exports, net exports are negative, which means they represent a leakage from the economy, reducing the potential income and output. Conversely, if exports exceed imports, net exports are positive, representing an injection into the economy, increasing the potential income and output. Therefore, statement A is true, while statement B, C, D, and E are not necessarily true in all cases.

Which of the Following Is True Concerning the Impact of Net