Other things being equal, the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n):
A) Rightward shift in the investment-demand schedule
B) Downward shift in the consumption schedule
C) Upward shift in the consumption schedule
D) Upward shift in the investment schedule

Question

Quizplus · Accepted Answer

A downward shift in the net export schedule means that there is a decrease in the demand for a country's exports, thereby decreasing the level of GDP. This is similar to a downward shift in the consumption schedule, as a decrease in consumption demand would also lead to a decrease in GDP. The other choices, such as an upward shift in the consumption or investment schedule, would have the opposite effect and increase GDP.

Other Things Being Equal, the Effect of a Downward Shift