If exports rise and imports fall:
A)equilibrium GDP falls.
B)aggregate expenditure rises.
C)aggregate expenditure falls.
D)net exports are not affected.

Question

Quizplus · Accepted Answer

When exports rise and imports fall, net exports will increase. This means that there is an increase in the demand for domestic goods and services in the overseas markets, which will lead to an increase in aggregate expenditure. Therefore, choice B is the correct answer. Equilibrium GDP will not necessarily fall in this scenario, and net exports will be affected.

If Exports Rise and Imports Fall