If the Price of Imported Inputs Suddenly Rises

question 19

Multiple Choice

If the price of imported inputs suddenly rises,

• A) we buy less, so aggregate demand falls
• B) we pay more for the same quantity, so aggregate demand rises
• C) we substitute domestic sources of inputs, so aggregate demand rises
• D) our ability to produce is reduced, so aggregate supply shifts inward
• E) GDP in unaffected because imports are netted out of gross domestic product

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