The U.S. imposed a tariff on solar panels produced in China. How did this affect China's IS curve?
A)Net exports decreased, leading to a left shift of the IS curve.
B)Net exports increased, leading to a right shift of the IS curve.
C)Government expenditure decreased, leading to a left shift of the IS curve.
D)Interest rates fell, leading to a left shift in the IS curve.

Question

Quizplus · Accepted Answer

The imposition of a tariff on solar panels produced in China would increase their price for U.S. buyers, leading to a decrease in net exports. This would lead to a leftward shift of the IS curve.

The US Imposed a Tariff on Solar Panels Produced in China