Draw the graph · Macro · Aggregate demand and aggregate supply
A trading partner enters recession
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.
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Aggregate demand shifts left. Short-run aggregate supply stays put. Long-run aggregate supply stays put.
Exports are part of net exports, a component of aggregate demand. When foreign buyers spend less, total spending on this country's output falls at every price level, so AD shifts left. Costs and capacity are unchanged.
The price level falls and real GDP falls, opening a recessionary gap.
Common mistake. Some students shift SRAS left because 'exporters produce less.' They produce less because foreign demand fell. The shift is in AD.
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Lesson: Aggregate Demand