Chapter 43, Problem 7MCQ

To determine

The correct option that does not explains the reason for synchronization between countries during economic downturns.

Answer to Problem 7MCQ

Option a is correct.

Explanation of Solution

Explanation for the correct option:

a.

It can be often seen that other countries are also suffering economic depression if there is an economic downturn in developed economies such as the country U and E. This is because of the linkage between different countries. But the government of one country does not often discuss its strategies or economic policies with other countries. Therefore, option a is the correct answer.

Explanation for incorrect options:

b.

MNCs operate in various countries which influences the economic depression of other countries too. Therefore, option b is incorrect.

c.

Aggregate supply is comprised of various resources that are traded across the countries. This linkage synchronized the economic downturn. Therefore, option c is incorrect.

d.

Imports and exports affect the aggregate demand which creates a linkage between various countries. Therefore, option d is incorrect.

e.

Tourism and immigration are other reasons for economic synchronization between various countries. Therefore, option e is incorrect.

Economics Concept Introduction

Foreign Exchange rate: The rate at which currencies of two different countries are exchanged. In other words, it is the rate at which one currency is exchanged with the other currency.