Question

Until recently the mountanous country of tibet had been cut off from the rest of the world. an active international sector has been created. Tibet has pursued an policy of ensuring that explors equal imports. As an result of thi policy, Tibet's AE function will:

a. Not Shift
b. Become Flatter
c. Become Steeper
d. Shift Upward

Explain the answer you circle: Why?

Pic unrelated.

Answer 1

I presume that AE means aggregrate expenditure.

I gotta go with a). If net exports is always zero, the aggregate expenditure should not change a bit.