A decrease in net exports will cause
A) a decrease in planned aggregate spending.
B) an increase in planned aggregate spending.
C) an increase in aggregate supply.
D) a decrease in aggregate supply.
E) no change in planned aggregate spending.

Question

Quizplus · Accepted Answer

Net exports represent the difference between exports and imports. A decrease in net exports means that there are fewer exports or more imports, which implies that foreigners are buying fewer goods and services from the domestic economy. This will reduce the total demand for domestic goods and services, leading to a decrease in planned aggregate spending.

A Decrease in Net Exports Will Cause