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ARBITRATION: Intervention of an impartial third party to settle disputes between two others. The decisions of this third party -- the arbitrator -- are legally binding, much like the ruling of a judge in a court of law. Arbitration is commonly used to interpret a collective bargaining agreement between unions and employers. Much like a judge (in some cases it is a judge) an arbitrator determines how a given union and employer conflict stacks up against the terms of existing agreement. Note that an arbitrator doesn't try to decide what's "best, "fair," or mutually agreeable to both sides -- as would be the case with mediation -- but only what's in line with the existing agreement.

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INTERCEPT, NET EXPORTS LINE:

The intercept of the net exports line indicates autonomous net exports, net exports that do not depend on the level of domestic income or production. This can be thought of as net exports, exports minus imports, that the foreign sector undertakes regardless of the state of the economy. Autonomous net exports are affected by the net exports determinants, which cause a change in the intercept and a shift of the net exports line.
Net Exports Line
Net Exports Line
The net exports line shows the relation between net exports undertaken by the foreign sector and domestic aggregate income or production. The income and production measures commonly used are national income and gross domestic product.

A representative net exports line is presented in the exhibit to the right. This red line, labeled X-M in the exhibit, is negatively sloped, indicating that greater levels of income generate greater net exports by the foreign sector. This negative relation indicates that imports, which are subtracted from exports to derived net exports, are induced by an expanding economy.

The net exports line graphically illustrates the net exports-income relation for the foreign sector, which is then added to the consumption line to derive the aggregate expenditures line used in Keynesian economics to identify equilibrium income and production.

The intercept of the net exports line indicates the intersection point between the net exports line and the vertical net exports axis. The net exports line intersects the vertical axis at a value of $1 trillion. Theoretically, this is a minimum "baseline" level of net exports, the amount of net exports undertaken if aggregate income falls to zero. It generally includes both autonomous exports and autonomous imports. This intersection indicates autonomous net exports--net exports unrelated to income. Click the [Intercept] button to illustrate.

Autonomous net exports are net exports by the foreign sector that are unrelated to and unaffected by the level of income or production. This is best indicated by a zero level of income. For the aggregate economy autonomous net exports are mostly an unlikely theoretical extrapolation.

However, from an analytical perspective, the intercept of the net exports line is affected by the net exports determinants. These are ceteris paribus factors other than income that affect net exports, but which are held constant when the net exports line is constructed. Any change in these determinants cause the net exports line to shift, which necessarily means a new intercept and a new level of autonomous net exports.

<= INTERCEPT, INVESTMENT LINEINTERCEPT, SAVING LINE =>


Recommended Citation:

INTERCEPT, NET EXPORTS LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: April 23, 2018].


Check Out These Related Terms...

     | net exports line | slope, net exports line | consumption line | intercept, consumption line | intercept, investment line | intercept, net exports line | induced net exports | autonomous net exports | marginal propensity to import |


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 | determinants |


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 | injections-leakages model | aggregate demand | paradox of thrift | fiscal policy | multiplier |


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