Question

A reduction in U.S net exports would shift U.S. aggregate demand

a. rightward. In an attempt to stabilize the economy, the government could increase expenditures.
b. rightward. In an attempt to stabilize the economy, the government could decrease expenditures.
c. leftward. In an attempt to stabilize the economy, the government could increase expenditures.
d. leftward. In an attempt to stabilize the economy, the government could decrease expenditures.

Answer 1

c. leftward. In an attempt to stabilize the economy, the government could increase expenditures.

Step-by-step explanation:

When the economy of a country faces a recession, that country chooses not to make high imports. For example, if Canada faces a recession in its economy, the Canadian government will not import more to stabilize the economy. According to the Keynesian framework, as the income of people decreases, the net export will be reduced, and the aggregate demand curve will shift leftward.