In June 2019, India imposed a tariff on almonds from the United States. How does this affect the IS curve in the U.S.?
A)Net exports decrease, leading to a left shift of the IS curve.
B)Net exports increase, leading to a right shift of the IS curve.
C)Government expenditure decreases, leading to a left shift of the IS curve.
D)Interest rates fall, leading to a left shift in the IS curve.

Question

Quizplus · Accepted Answer

Imposing a tariff on almonds from the U.S. will make them more expensive for Indian consumers, dampening demand and reducing exports. As a result, net exports will decrease, leading to a leftward shift of the IS curve, which shows the relationship between interest rates and real GDP, holding everything else constant.

In June 2019, India Imposed a Tariff on Almonds from the United