All other things unchanged, what happens if the U.S. reduces its quota on sugar imports?
A) Net exports increases and shifts the short-run aggregate supply curve to the right.
B) Net exports decreases and shifts the short-run aggregate supply curve to the right.
C) Net exports increases and shifts the aggregate demand curve to the right.
D) Net exports decreases and shifts the aggregate demand curve to the left.

Question

Quizplus · Accepted Answer

If the U.S. reduces its quota on sugar imports, it will result in a decrease in net exports as less sugar is being imported into the country. This decrease in net exports will shift the aggregate demand curve to the left as there will be less demand for goods due to the decrease in exports. Therefore, the correct answer is D.

All Other Things Unchanged, What Happens If the U