Ask Question
17 July, 12:04

Assume the countries of Ornania and Kumbagi are major trading partners. Ornania is currently in long-run macroeconomic equilibrium. As a result of a recession in its economy, Kumbagi decreases its demand for goods produced in Ornania. What will occur in Ornania in the short run?

+3
Answers (1)
  1. 17 July, 13:57
    0
    Answer: The aggregate demand curve will shift to the left, resulting in a recessionary gap

    Explanation:

    Since Ornania and Kumbagi are trading partners and Kumbagi later reduced its demand for the goods produced in Ornania, this will lead to the aggregate demand curve shifting to the left in Ornania and can lead to a recessionary gap.

    The aggregate demand curve will shift to the left because there is a reduction in demand. Contractionary fiscal policy is also another reason for a shift in the aggregate demand curve to the left.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Assume the countries of Ornania and Kumbagi are major trading partners. Ornania is currently in long-run macroeconomic equilibrium. As a ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers