Figure 20-7

-In Figure 20-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from B to A?
A)a recession in Southeast Asia
B)an economic expansion in Japan
C)a depreciation of the dollar
D)an increase in the interest rate

Question

Figure 20-7
 
-In Figure 20-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from B to A?
A)a recession in Southeast Asia 
B)an economic expansion in Japan 
C)a depreciation of the dollar 
D)an increase in the interest rate

Quizplus · Accepted Answer

A recession in Southeast Asia would likely decrease exports from the domestic economy to Southeast Asia, reducing aggregate expenditure and causing a movement from a higher level of aggregate expenditure (B) to a lower level (A).

Figure 20-7 -In Figure 20-7, There Are Three Aggregate Expenditure Functions (C