Suppose there is a reduction in foreign output (y*). this reduction in y* will cause which of the following in the domestic country? a) a reduction in output b) a reduction in consumption c) a reduction in net exports d) all of the above e) none of the above

The correct answer is  D) all of the above

Explanation:

Lower foreign output  means lower foreign demand. So the direct effect of the decrease in foreign output is a declining  in U.S. exports by some amount.

The economy depends on the output in terms of demands and goods.