Suppose a Recession in Europe Reduces U

question 213

Multiple Choice

Suppose a recession in Europe reduces U.S. net exports at every price level. Which of the following would you expect to occur in the U.S. as a result of this change?

• A)In the short run, unemployment will increase and inflation will fall.
• B)In the short run, unemployment will increase and inflation will rise.
• C)In the short run, unemployment will decrease and inflation will rise.
• D)In the short run, unemployment will decrease and inflation will fall.

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