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 ʺ... factories have been exposed to ... competition from China, India and other Asian mass producers.ʺ As a result, ʺthe main export industry has seen a 30 per cent reduction in volume ...ʺ
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Question

Quizplus · Accepted Answer

The decrease in the export industry's volume suggests a decrease in autonomous expenditure, which refers to spending that is not influenced by changes in income or prices. This decrease in autonomous expenditure could lead to a decrease in overall economic activity and possibly a decrease in induced expenditure, which is spending that is influenced by changes in income or prices. There is no mention of unplanned changes in inventories, and there is no evidence to suggest an increase in equilibrium expenditure.

Mauritius, an Island Off the Coast of Africa, Competes with Other