Asked by Camila Almeida on Jul 01, 2024
Verified
Other things the same, as the price level decreases it induces greater spending on
A) both net exports and investment.
B) net exports but not investment.
C) investment but not net exports.
D) neither net exports nor investment.
Net Exports
The value of a country's total exports minus the value of its total imports; it is a component of a country's gross domestic product.
Investment
The expenditure on capital assets that may yield returns in the future, such as stocks, bonds, or physical property.
Price Level
A comprehensive mean of the existing prices for the economy's produced goods and services.
- Understand the factors that influence aggregate demand and how changes in price levels affect spending on net exports and investment.
Verified Answer
HE
Hamidreza Ensandoust6 days ago
Final Answer :
A
Explanation :
When the price level decreases, it makes a country's goods cheaper relative to foreign goods, which increases net exports. Additionally, lower price levels reduce interest rates, which encourages more investment.
Learning Objectives
- Understand the factors that influence aggregate demand and how changes in price levels affect spending on net exports and investment.