If the domestic income of a nation's citizens increase thus causing consumption spending to increase, then we generally expect net export spending to:
A. remain constant because when we increase domestic purchases it is directly offset by a reduction in foreign purchases.
B. decrease as well because as consumption increases we also buy more foreign goods and services.
C. increase as well because as consumption increases we also buy more foreign goods and services.
D. there is not enough information to determine what would happen.
Answer: B
You might also like to view...
Consider this quote from an article in the Wall Street Journal: "The stock of educated workers isn't increasing fast enough to keep up with rising demand
Employers are paying the typical four-year college graduate [without graduate school] 75% more than they pay high-school grads. Twenty-five years ago, they were paying 40% more. Employers insist on ever better-educated, skilled workers. " Source: David Wessel, "Lack of Well-Educated Workers Has Lots of Roots, No Quick Fix," Wall Street Journal, April 19, 2007, A) The demand for high-school educated workers shifted to the left faster than the supply of college educated workers shifted to the right. B) The supply of high-school educated workers shifted to the right faster than the demand for college educated workers shifted to the right. C) The demand for college educated workers shifted to the right faster than the supply of college educated workers shifted to the right. D) The demand for college educated workers shifted to the right while the supply of college educated workers shifted to the left.
If Brazil imposes a 50% tariff on automobiles and a 25% tariff on motors, the effective rate of protection on autos is
A) higher than the nominal rate of protection on autos. B) need more information to answer. C) lower than the nominal rate of protection on autos. D) equal to the nominal rate of protection on autos.