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Which one of the following will cause a shift of the NX curve to the right?
Economics
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Answer
C
Step-by-step solution
6 stepsThe NX curve shows net exports (NX = Exports Imports) as a function of income (Y).
It slopes downward because higher Y increases imports, reducing NX:
where is autonomous exports and is the marginal propensity to import ().
A rightward shift of the NX curve means higher NX at every Y level (e.g., due to higher autonomous exports).
Option A -- An increase in the level of output and income
This raises Y, causing a movement along the NX curve to a lower NX (higher imports). No shift.
Option B -- An increase in government spending
This raises Y (via multiplier), causing a movement along the NX curve to lower NX. No shift.
Option C -- An increase in foreign demand for domestic goods
This raises autonomous exports (), increasing NX at every Y:
The NX curve shifts right.
Option D -- An increase in imports
Autonomous imports rise or , decreasing NX at every Y. The NX curve shifts left.
The answer is C.
C
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