FIGURE 12SAVING, INVESTMENT, GOVERNMENT SPENDING, AND NET EXPORTS
Adding investment (I), government spending (G), and net exports (X − M) causes income and output to rise or fall by the spending change times the multiplier. In this figure, we have added net exports (X − M) of $100 to the investment and government spending in Figure 10 to get I + G + (X − M). Thus, an increase in investment spending, government spending, and net exports has the same effect on income and output.
