Mauritius, an Island Off the Coast of Africa, Competes with Other

question 250

Multiple Choice

Mauritius, an island off the coast of Africa, competes with other countries producing goods with low-skilled labor. In 2006, it was reported that its "... factories have been exposed to ... competition from China, India and other Asian mass producers." As a result, "the main export industry has seen a 30 per cent reduction in volume ..." www.ft.com, 3/13/2006
The decrease in exports will cause ________ and the price level will ________.

• A) a downward shift in the AE curve; decrease as the AD curve shifts leftward in the short run
• B) an upward shift in the AE curve; increase as the AD curve shifts rightward in the long run
• C) a leftward shift in the AD curve; fall in the short run and rise in the long run
• D) a leftward shift in the AD curve; rise in the long run as goods become more scarce

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Definitions:

Alcoholism

Alcoholism is a chronic disease characterized by uncontrolled drinking and a preoccupation with alcohol.

Cross-tolerance

A phenomenon where tolerance to the effects of a certain drug produces tolerance to another drug, usually because both drugs are similar in their effects or mechanisms of action.

Polysubstance Disorder

A condition characterized by the misuse of multiple substances or drugs, either simultaneously or at different times.

Tolerance

The process by which the body increasingly adapts to a substance (like alcohol or drugs), requiring larger amounts to achieve the original effect.