Which of the following scenarios would decrease the net exports component of aggregate expenditure?
A) The euro increases in value relative to other currencies.
B) A "Buy American" campaign reduces the amount of goods imported.
C) The United States experiences a recession.
D) A decrease in tariffs makes it less expensive to import goods into the United States.

Question

Quizplus · Accepted Answer

A decrease in tariffs makes it less expensive to import goods into the United States, which would likely increase imports. Since net exports are calculated as exports minus imports, an increase in imports would decrease net exports.

Which of the Following Scenarios Would Decrease the Net Exports