Impact on Equilibrium GDP

For each situation listed below, state whether the change will cause U.S. net exports, and therefore aggregate expenditures and equilibrium GDP, to increase or decrease and explain why they will either increase or decrease.

Complete parts a and b.

a. Appreciation of the U.S. dollar leading to parity between it and the euro.

b. Disposable incomes that are rising faster in the U.S. than in foreign nations.