If net exports increase by $450 billion at every level of income, equilibrium real GDP demanded will
A)increase by $450 billion
B)decrease by $450 billion
C)increase by more than $450 billion because of the multiplier effect
D)increase by less than $450 billion
E)decrease by more than $450 billion because of the multiplier effect

Question

Quizplus · Accepted Answer

An increase in net exports raises aggregate demand, and due to the multiplier effect, the total increase in equilibrium real GDP will be more than the initial $450 billion increase in net exports.

If Net Exports Increase by $450 Billion at Every Level