Answer to Question #67092 in Macroeconomics for Grace Tsai

Question

19. If Canada is the most important trading partner of the United States, what effect will stagflation in Canada have on aggregate demand in the U.S.?

A. The effect will be indeterminate.
B. It will increase aggregate demand in the U.S.
C. It will decrease aggregate demand in the U.S.
D. It will increase aggregate demand in the U.S. if the decrease in Canadian output is large enough.
E. It will increase aggregate demand in the U.S. if the decrease in Canadian unemployment is very large.

Answer 1

Answer:e