"The global financial crisis has had a considerable impact on China's export growth, which will cont show weakness with recession in the U.S. and Europe," said a report by JP Morgan & Co.
Money.cnn.com, 11/11/20
If Chinese exports continue to decline, the AE curve will shift , the price level will the short run and real GDP will in the short run.

Question

Quizplus · Accepted Answer

The report states that the impact of the global financial crisis on China's exports will continue to show weakness. If Chinese exports continue to decline, this will lead to a shift in the AE curve downward (since net exports are a component of AE). This will cause a decrease in the price level in the short run, as there will be less demand for goods and services. Additionally, real GDP will also decrease in the short run, as firms will produce less output in response to the decrease in demand. Thus, the correct answer is A).

"The Global Financial Crisis Has Had a Considerable Impact on China's