Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A decrease in demand for Country Alpha's exports
B
An increase in productivity within Country Alpha
C
A rise in domestic consumption due to lower prices
D
An influx of foreign investments increasing capital
Understanding the Answer
Let's break down why this is correct
Answer
When Country Alpha's trading partner goes into a recession, it means that the partner's economy is slowing down. This can lead to fewer goods and services being bought from Country Alpha because people in the trading partner are spending less money. As a result, Country Alpha may produce less because there is less demand for its exports. For example, if Country Alpha sells cars to its trading partner and the partner's economy slows, fewer cars will be purchased, causing Country Alpha to cut back on production. This decrease in production can lead to lower output and possibly affect jobs in Country Alpha as well.
Detailed Explanation
When a trading partner has a recession, they buy less from Country Alpha. Other options are incorrect because Some might think that better productivity means more output; It's easy to think that lower prices would make people buy more.
Key Concepts
Full Employment Equilibrium
Aggregate Demand and Supply
Monetary Policy
Topic
Full Employment Equilibrium
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.