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Consider an Open Economy in Which the Aggregate Supply Curve

question 20

Essay

Consider an open economy in which the aggregate supply curve slopes upward in the short-run.Firms in this nation do not import raw materials from abroad,but foreign residents purchase much of the nations output.What is the most likely short-run effect on this nations economy if there is a significant downturn in economic activity in other nations around the world.


Definitions:

League of Nations

An international organization established after World War I intended to maintain world peace and prevent future conflicts.

Senate

One of the two chambers of the United States Congress, responsible for making federal laws and composed of senators from each state.

Foreign Policy

A government's strategy in dealing with other nations, determining how they interact with other countries politically, economically, and militarily.

Woodrow Wilson

The 28th president of the United States (1913-1921), known for leading the country during World War I and for his efforts in shaping the post-war peace settlement, including the founding of the League of Nations.

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