Figure 36-7

-In Figure 36-7, 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 36-7
​ 
-In Figure 36-7, 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 reduce demand for exports from the economy in question, leading to a decrease in aggregate expenditure and causing a movement from a higher level of aggregate expenditure (B) to a lower level (A).

Figure 36-7 ​

Figure 36-7