Consider the Canadian economy initially at potential output.An economic recession in the U.S.__________ the demand for exports from Canada,resulting in a reduction in Canadian planned aggregate expenditure and a(n)________ output gap in Canada.

Question

Quizplus · Accepted Answer

A recession in the U.S. reduces demand for exports from Canada, leading to a reduction in Canadian planned aggregate expenditure and a recessionary output gap. An expansionary output gap would imply an increase in aggregate demand, which is not the case in a recession. The terms "autonomous" and "expansionary" do not provide information about the impact on output gap in the question context.

Consider the Canadian Economy Initially at Potential Output