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:

Profit Centers

Divisions within a company that are treated as separate business units, with their performance measured based on their ability to generate profit.

Transfer Price

The price at which goods and services are sold between divisions within the same company or different companies under the same ownership.

Upstream Division

A segment of a company or industry involved in the early stages of production or supply chain, often dealing with raw materials.

Downstream Division

A segment or part of an organization focused on the later stages of production or distribution in the supply chain, such as sales and delivery of the final product.