An increase in which of the following would cause an increase in the United States gross domestic product?

Rationale

Exports would cause an increase in the United States gross domestic product.

An increase in exports contributes directly to the gross domestic product (GDP) by boosting the overall economic output of a country. Higher exports mean more goods and services are sold abroad, leading to increased production, job creation, and income within the economy.

A (Income taxes) YOUR ANSWER

Increasing income taxes generally reduces disposable income for consumers and businesses, which can lead to decreased spending and investment. This reduction in consumption can negatively impact economic growth and, consequently, the gross domestic product.

B (Imports) YOUR ANSWER

An increase in imports represents a rise in goods and services purchased from other countries, which does not contribute positively to the GDP of the United States. Instead, imports are subtracted from the GDP calculation, as they represent spending that does not support domestic production.

C (Exports) CORRECT

Increasing exports directly affects the GDP by adding to the total economic output. When goods and services are sold to foreign markets, it enhances domestic production levels, stimulates job growth, and supports business expansion, thereby positively impacting the GDP.

D (Long-term interest rates) YOUR ANSWER

Higher long-term interest rates can discourage borrowing and investment by businesses and consumers. This can lead to reduced spending and slower economic growth. Consequently, an increase in long-term interest rates may hinder GDP growth rather than promote it.

Conclusion

Exports play a crucial role in enhancing the United States' gross domestic product by increasing demand for domestic products in international markets. Unlike income taxes, imports, or long-term interest rates, which can detract from economic activity, higher exports drive production and contribute positively to overall economic growth. Thus, fostering export growth is essential for a thriving economy.

An increase in which of the following would cause an increase in the United States gross domestic product?

Exports would cause an increase in the United States gross domestic product.

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