In a two-country world consisting of Japan and the United States,a contraction in the Japanese economy will lead to lower Real GDP in the United States.

Question

Quizplus · Accepted Answer

A contraction in the Japanese economy can lead to a reduction in its imports from the United States, which can have a negative impact on the US economy. This is because a decrease in exports can lead to a reduction in production and employment in the exporting country. Additionally, a weaker Japanese economy can lead to a reduction in demand for goods and services, leading to lower demand for US exports.

In a Two-Country World Consisting of Japan and the United