If American college students decide that drinking Mexican-brewed beer helps one get noticed,net exports will tend to fall,causing aggregate demand to ________ and the ________ curve to shift to the left,everything else held constant.
A)fall;LM
B)fall;IS
C)rise;LM
D)rise;IS

Question

Quizplus · Accepted Answer

If American college students decide to drink more Mexican-brewed beer, it will increase the demand for Mexican beer and decrease the demand for American beer. As a result, net exports will fall, leading to a decrease in aggregate demand. This will shift the IS curve to the left since a fall in net exports will reduce GDP at every level of interest rates.

If American College Students Decide That Drinking Mexican-Brewed Beer Helps