Mauritius, an island off the coast of Africa, competes with other countries producing goods with low-skilled labor. In 2006, it was reported that its "...factories have been exposed to ... competition from China, India, and other Asian mass producers." As a result, "the main export industry has seen a 30% reduction in volume..." Suppose real GDP is $14 billion, exports total $2 billion and the multiplier is 4. If exports decline by $600,000,000, real GDP in Mauritius will:
a) increase by $2.4 billion
b) decrease by $2.4 billion
c) decrease by $8 billion
d) increase by $4 billion
b) decrease by $2.4 billion
Economics
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