Assuming aggregate supply is upward-sloping and aggregate demand is downward-sloping,a sudden reduction in a nation's exports will
A) cause inflation
B) cause recession
C) cause stagflation
D) increase GDP and reduce prices
E) increase GDP and raise equilibrium prices

Question

Quizplus · Accepted Answer

A sudden reduction in a nation's exports will decrease aggregate demand, which will result in a decreased demand for goods and services, leading to a recession.

Assuming Aggregate Supply Is Upward-Sloping and Aggregate Demand Is Downward-Sloping,a