"The global financial crisis has had a considerable impact on China's export growth, which will continue to show weakness with recession in the U.S. and Europe," said a report by JP Morgan & Co. www.money.cnn.com, 11/11/2008
If Chinese exports continue to decline, the AE curve will shift ________, the price level will ________ in the long run and real GDP will ________ in the long run.

Question

Quizplus · Accepted Answer

A decline in Chinese exports reduces aggregate expenditure (AE), shifting the AE curve downward. In the long run, the price level decreases, but real GDP returns to its potential level, so it does not change.

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