An economic expansion in the United States ________ the demand for exports from Mexico resulting in an increase in Mexican autonomous expenditures and a(n)________ output gap in Mexico.
A)reduces; expansionary
B)increases; expansionary
C)reduces; recessionary
D)increases; recessionary

Question

Quizplus · Accepted Answer

An expansion in the United States can easily spread around the world. In this case, the higher incomes in the United States result in increased purchases from Mexico and this creates an expansionary output gap in Mexico.

An Economic Expansion in the United States ________ the Demand