Ceteris paribus, how does a recession in the United States affect U.S. net exports?
What will be an ideal response?
As GDP decreases in the United States due to the recession, the incomes of households fall. Households respond by lowering their purchases of goods and services. Some of the decline in purchases includes domestic goods and services; some of the decline includes foreign produced goods and services. This essentially lowers imports. Assuming that exports do not change, net exports will rise.
You might also like to view...
When ticket scalpers buy up hundreds of Chicago Cubs tickets the day tickets go on sale, they are
A) behaving unethically. B) hoping to buy high and sell low. C) hoping to buy low and sell high. D) ruining it for everyone else.
Which of the following statements regarding the Federal Open Market Committee is correct?
a. Only the five voting regional Fed presidents attend the meetings. b. All regional Fed presidents attend and vote at the meetings. c. All regional Fed presidents attend the meetings, but only five get to vote. d. Regional Fed presidents may neither attend nor vote the meetings.