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If the value of a nation’s imports exceeds the value of its exports, which of the following is NOT true? a. Net exports are negative. b. GDP is less than the sum of consumption, investment, and government purchases. c. Domestic investment is greater than national saving. d. The nation is experiencing a net outflow of capital.

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Principles of Macroeconomics (Mind...

7th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781285165912

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Chapter
Section
BuyFindarrow_forward

Principles of Macroeconomics (Mind...

7th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781285165912
Chapter 18, Problem 3QCMC
Textbook Problem
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If the value of a nation’s imports exceeds the value of its exports, which of the following is NOT true?

a. Net exports are negative.

b. GDP is less than the sum of consumption, investment, and government purchases.

c. Domestic investment is greater than national saving.

d. The nation is experiencing a net outflow of capital.

To determine
Changes in volume of export and import.

Explanation of Solution

Option (d):

If the value of a nation’s import exceeds its value of export, it results in the net export being negative. When the value of a nation’s import exceeds its value of export, the nation experiences a net out flow of capital, which is a wrong statement. Thus, the option “d” is correct.

Option (a):

When value of a nation’s import exceeds its value of export, it leads to the net export being negative. That is, the additional value of export over the imports declined. Thus, the option “a” is incorrect...

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