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June 22, 2018 

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INDUCED NET EXPORTS: Net exports by the foreign sector that depend on income or production (especially national income and gross domestic product). That is, changes in income induce changes in net exports. Induced net exports reflect the induced relation between imports and income, which means net exports decline as income increases. They are measured by the negative of the marginal propensity to import (MPM) and are reflected by the negative slope of net exports line. The alternative to induced net exports is autonomous net exports, which do not depend on income.

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EXPORTS LINE:

A graphical depiction of the relation between exports sold to the foreign sector and the economy's aggregate level of income or production. This relation is most important for deriving the net exports line, which plays a minor, but growing role in the study of Keynesian economics. An exports line is horizontal which indicates that exports are totally autonomous, with no induced component. The aggregate expenditures line used in Keynesian economics is derived by adding or stacking the net exports line, derived as the difference between the exports line and imports line, onto the consumption line, after adding investment expenditures and government purchases.
The exports line shows the relation between exports of domestic production purchased by the foreign sector and aggregate income or production. The income and production measures most commonly used are national income and gross domestic product. The purpose of the exports line is to graphically illustrate the exports-income relation for the foreign sector, which is then used to derive the net exports line by vertically subtracting the imports line, after which it is then integrated into the aggregate expenditures line used in Keynesian economics.

Net exports are the difference between exports and imports, or exports minus imports. Exports are purchases of domestic production by the foreign sector and imports are purchases of foreign production by the domestic economy. While imports are induced by the level of domestic income and production, exports are totally autonomous. Reflecting this, the exports line is horizontal, with a zero slope. There are no induced exports. The vertical intercept, or Y-intercept, of the exports line reflects autonomous exports.

Exports Line
Exports Line
The horizontal red line, labeled X in the exhibit to the right, indicates a typical exports line. Line any straight line, this exports line is characterized by two key parameters, intercept and slope. The intercept indicates autonomous exports and the slope indicates the degree of induced exports, if any actually existed.

Identifying numbers for these two parameters for this particular line indicates that the intercept is $1 trillion, meaning autonomous exports is $1, and the slope is 0, meaning a $1 increase in domestic income or production induces a $0 decrease in exports. A zero slope means exports are autonomous and equal to $1 trillion for every level of domestic income and production.

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Recommended Citation:

EXPORTS LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: June 22, 2018].


Check Out These Related Terms...

     | induced net exports | autonomous net exports | induced imports | autonomous exports | marginal propensity to import | slope, net exports line | intercept, net exports line | consumption line | saving line | investment line | government purchases line |


Or For A Little Background...

     | net exports | exports | imports | net exports of goods and services | Keynesian economics | macroeconomics | foreign sector | national income | gross domestic product |


And For Further Study...

     | induced expenditures | autonomous expenditures | aggregate expenditures | aggregate expenditures line | derivation, consumption line | net exports determinants | Keynesian model | Keynesian equilibrium | injections-leakages model | aggregate demand | paradox of thrift | fiscal policy | multiplier | government functions |


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