A decrease in foreign output would cause the domestic country's net exports to ________ and cause the domestic country's IS curve to ________.
A)rise; shift up
B)rise; shift down
C)fall; shift up
D)fall; shift down

Question

Quizplus · Accepted Answer

A decrease in foreign output would lead to a decrease in demand for the domestic country's goods and services, which would result in a fall in net exports. This would shift the IS curve down as a decrease in net exports reduces aggregate demand.

A Decrease in Foreign Output Would Cause the Domestic Country's