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

question 292

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 represents a change in ________ expenditure and will cause ________.

• A) induced; a downward shift in the AE curve and a leftward shift in the AD curve
• B) autonomous; a downward shift in the AE curve and a leftward shift in the AD curve
• C) induced; an upward shift in the AE curve and a leftward shift in the AD curve
• D) autonomous; a downward shift in the AE curve and a rightward shift in the AD curve

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Definitions:

Current Yield

Current Yield is the annual income (interest or dividends) earned from an investment, expressed as a percentage of the current price of the security.

Trading

The action or activity of buying, selling, or exchanging goods, services, or financial instruments.

Coupon Bond

A type of debt security that pays the holder periodic interest payments based on the coupon rate until maturity, at which point the principal is repaid.