Adding Investment

Exports expand aggregate spending imports contract it

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Unformatted text preview: rts expand aggregate spending; imports contract it. • Exports act as an injection like investment. Exports are a part of aggregate expenditures. Imports (goods produced outside the US) act as leakages from the income stream. Imports are subtracted when measuring aggregate expenditures . C+Ig+Xn1 AE with positive Net Exports A g g r e g a t e E x p e n d i t u r e s C+Ig C+Ig+Xn2 AE with negative Net Exports You can see the effect (both positive and negative) of the multiplier here! 45 ˚ Key Graph, p. Rea...
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This note was uploaded on 01/30/2014 for the course ECON 259 taught by Professor Geanakopolis during the Fall '10 term at Purdue.

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