Google
Tuesday 
March 19, 2019 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
CBO: The abbreviation of Congressional Budget Office, which is a Congressional agency that provides Congress with information needed for various economic and budget decisions. Established in 1974, the CBO is responsible for providing Congress with objective, timely, nonpartisan analyses used for economic and budget decisions. A key task is to generate information and estimates required for the Congressional budget process. The Presidential counterpart of the CBO is the Office of Management and Budget (OMB). And unlike the OMB, every attempt is made to ensure that the CBO is nonpartisan and objective. It does not recommend policies, but only presents alternatives.

Visit the GLOSS*arama


SLOPE, NET EXPORTS LINE:

The negative slope of the net exports line is based on the marginal propensity to import (MPM). Because net exports are exports minus imports, the induced change in imports causes an opposite change in net exports. As such, the slope of the net exports line is negative, less than zero (but greater than negative one). The slope of the net exports line affects the slope of the aggregate expenditures line and thus also affects the magnitude of the multiplier process.
Net Exports Line
Net Exports Line
The net exports line shows the relation between net exports by the foreign sector and the level of aggregate domestic income or production. The income and production measures most 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 or production generate smaller levels of 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 slope of the net exports line presented here is negative. In fact, the slope of the net exports line is numerically equal to the negative of the marginal propensity to import. In this case the slope is equal to -0.075. The negative slope reflects induced net exports--more income means fewer net exports. Click the [Slope] button to illustrate.

To illustrate the equality between slope and the negative of the marginal propensity to import, consider the equations for each. The slope of the net exports line is specified as the "rise" over the "run." The rise is the change in net exports measured on the vertical axis and the run is the change in income measured on the horizontal axis. However, because exports are autonomous, the only income induced change in net exports comes from imports, in a negative way.

slope=rise
run
=change in net exports
change in income
= -change in imports
change in income
The marginal propensity to import (MPM) is the incremental change in net exports resulting from an incremental change in income.
MPM=change in imports
change in income
The negative slope of the net exports line is the marginal propensity to import, or the slope of the net exports line is the negative of the marginal propensity to import, on is the negative of the other.

The negative slope of the net exports line reflects induced net exports, which is net exports that depend on the level of income. If the aggregate economy has more income, then the foreign sector is induced to undertake fewer net exports. Of course, a drop in aggregate income induces the foreign sector to increase net exports.

<= SLOPE, LONG-RUN AGGREGATE SUPPLY CURVESLOPE, PRODUCTION POSSIBILITIES CURVE =>


Recommended Citation:

SLOPE, NET EXPORTS LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: March 19, 2019].


Check Out These Related Terms...

     | net exports line | intercept, net exports line | consumption line | slope, consumption line | slope, investment line | slope, 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 |


Search Again?

Back to the WEB*pedia


APLS

YELLOW CHIPPEROON
[What's This?]

Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors looking to buy either blue cotton balls or a genuine down-filled pillow. Be on the lookout for small children selling products door-to-door.
Your Complete Scope

This isn't me! What am I?

A scripophilist is one who collects rare stock and bond certificates, usually from extinct companies.
"Whatever course you decide upon, there is always someone to tell you that you are wrong. There are always difficulties arising which tempt you to believe that your critics are right. To map out a course of action and follow it to an end requires...courage."

-- Ralph Waldo Emerson

APEC
Asia-Pacific Economic Co-operation
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2019 AmosWEB*LLC
Send comments or questions to: WebMaster