Suppose Net Exports Decreases by $100 Million Due to a Slump

question 156

Multiple Choice

Suppose net exports decreases by $100 million due to a slump in foreign economies. If the the value of the multiplier is 2, what happens to the domestic aggregate demand curve?

• A) Since less will be produced, the aggregate demand does not shift. The aggregate supply curve shifts to the left by $100 million at each price level.
• B) It shifts to the left by $50 million at each price level.
• C) It shifts to the left by $100 million at each price level.
• D) It shifts to the left by $200 million at each price level.

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Definitions:

Reaction

An action where materials combine and create new compounds that possess distinct characteristics.

Notations

Symbols and signs used in various fields such as mathematics, music, and literature to represent specific concepts, quantities, and operations.

Two-way Tables

A type of table used to display frequencies for two categorical variables, showing the relationship between them.

Null Hypothesis

The null hypothesis is a type of hypothesis used in statistics that suggests there is no statistical significance in a set of given observations.