ʺThe global financial crisis has had a considerable impact on Chinaʹs export growth, which will continue to show weakness with recession in the U.S. and Europe,ʺ said a report by JP Morgan & Co.
If Chinese exports continue to decline, the AE curve will shift __________, the price level will__________In the short run and real GDP will__________ in the short run.

Question

Quizplus · Accepted Answer

If Chinese exports continue to decline, the AE (aggregate expenditure) curve will shift downward as there will be less demand for Chinese goods. This will result in a decrease in the price level since there will be less demand for goods and services, causing a decrease in inflation. In the short run, real GDP will also decrease as there will be less demand for goods and services, causing a decrease in production and output.

ʺThe Global Financial Crisis Has Had a Considerable Impact on Chinaʹs