An economic recession in Japan ______ the demand for exports from East Asian countries resulting in a reduction in autonomous expenditures in these East Asian countries and a(n) ______ output gap in the East Asian countries.
A) reduces; expansionary
B) increases; expansionary
C) reduces; recessionary
D) increases; recessionary

Question

Quizplus · Accepted Answer

A recession in Japan would decrease the demand for exports from East Asian countries, leading to a reduction in autonomous expenditures (spending not influenced by income) in these countries. This reduction in spending would result in a recessionary output gap, meaning the actual output of these countries falls below their potential output.

An Economic Recession in Japan ______ the Demand for Exports