Figure 36-7

-In Figure 36-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from A to B?

Question

Figure 36-7
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-In Figure 36-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from A to B?

Quizplus · Accepted Answer

A European economic expansion would increase exports (X) from the depicted economy (assuming it's the U.S.), shifting the aggregate expenditure function upwards from A to B. This is because an economic expansion in Europe would likely increase their demand for imports, including goods and services from the U.S.

Figure 36-7 ​

Figure 36-7