When variable net exports are added to the aggregate expenditure line, the resulting planned aggregate expenditure line becomes
A)steeper because net exports increase as real domestic income increases
B)flatter because net exports increase as real domestic income increases
C)steeper because net exports decrease as real domestic income increases
D)flatter because net exports decrease as real domestic income increases
E)flatter because imports decrease as real domestic income increases

Question

Quizplus · Accepted Answer

Net exports typically decrease as real domestic income increases because imports tend to rise with higher income, making the aggregate expenditure line flatter.

When Variable Net Exports Are Added to the Aggregate Expenditure