An economic recession in the U.S. ______ the demand for exports from Canada resulting in a reduction in Canadian autonomous expenditures and a(n) ______ output gap in Canada.
A) reduces; expansionary
B) increases; expansionary
C) reduces; recessionary
D) increases; recessionary

Question

Quizplus · Accepted Answer

A recession in the U.S. would reduce the demand for exports from Canada, leading to a reduction in Canadian autonomous expenditures. This reduction in demand would cause a decrease in production and an output gap in Canada, which is recessionary. Therefore, the correct answer is C) reduces; recessionary.

An Economic Recession in the U