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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