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a smooth trend whereas, lii spending is more volatile and subject 89) 89) spending follows to fluctuations A) Investment consumer C) Consumer government B) Government; consumer D) Consumer: investment 90) If inflation in the United States is lower than inflation in other countries, what will be the effect on 90) net exports for the United States? A) Net exports will rise as U.S exports increase. B) Net exports will decrease as U.S exports decrease C) Net exports will rise as U.S. imports increase. D) Net exports will decrease as U.S. imports decrease Figure 23-3 Real aggregate expenditure, AE trillions of 2000 dollars) AE AE

Can you solve 90

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Answer #1

Answer is option A:Net exports will rise as U.S exports increase.

A lower inflation rate in one country means lower imports and increased exports and vice versa.

As the price level falls, interest rates drops down, domestic investment in foreign countries increases, the exchange rate depreciates, net exports increases, and aggregate demand increases.

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