Suppose there is a reduction in foreign output (Y). This reduction in Y will cause which of the following in the domestic country? A) a reduction in output B) a reduction in consumption C) a reduction in net exports D) all of the above E) none of the above

Lower foreign output means lower foreign demand. So the direct effect of the decrease in foreign output is a declining in U.S. exports by some amount.

The economy depends on the output in terms of demands and goods.

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Tundexi Tundexi · Answer 2 · 2022-03-25T13:07:40+01:00

The reduction in Y* will cause a reduction in output, a reduction in consumption and a reduction in net exports.

What does decrease in foreign output do?

The decrease in foreign output does reduces the domestic output and diminishes the trade balance.

Hence, the reduction in Y* will cause a reduction in output, a reduction in consumption and a reduction in net exports.

Therefore, the Option D is correct

Suppose there is a reduction in foreign output (Y*). This reduction in Y* will cause which of the following in the domestic country? A) a reduction in output B) a reduction in consumption C) a reduction in net exports D) all of the above E) none of the above

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What does decrease in foreign output do?

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Suppose there is a reduction in foreign output (Y). This reduction in Y will cause which of the following in the domestic country? A) a reduction in output B) a reduction in consumption C) a reduction in net exports D) all of the above E) none of the above