Suppose the Rest of the World Experiences a Recession That

question 61

Multiple Choice

Suppose the rest of the world experiences a recession that causes a decrease in foreign income. From the domestic economy's perspective, this foreign income decrease will cause which of the following as the domestic economy adjusts to the fall in foreign income?

• A) A decrease in domestic income and a decrease in imports.
• B) A decrease in imports and an increase in net exports.
• C) The net exports line to shift up.
• D) An increase in net exports.
• E) An increase in the demand for domestic goods.

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Definitions:

Red Wine

A type of wine made from dark-colored grape varieties and characterized by its red hue.

Heart Disease

A broad term for various types of heart conditions, including coronary artery disease and heart failure.

Supply Curve

a graphical representation showing the relationship between the price of a good and the quantity supplied.

Decrease in Supply

A downward shift in the supply curve, representing a reduction in the quantity of a good or service available at any given price.