Mauritius, an island off the coast of Africa, competes with other countries producing goods with low- skilled labor. In 2006, it was reported that its "... factories have been exposed to ... competition China, India and other Asian mass producers." As a result, "the main export industry has seen a 30 cent reduction in volume ..."
w.ft.com, 3/13/200
The decrease in exports represents a change in expenditure and will cause _ .
A) induced; an upward shift in the AE curve and a leftward shift in the AD curve
B) autonomous; a downward shift in the AE curve and a leftward shift in the AD curve
C) induced; a downward shift in the AE curve and a leftward shift in the AD curve
D) autonomous; a downward shift in the AE curve and a rightward shift in the AD curve
Correct Answer:
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