Open Economy and Aggregate Supply

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First off, I would like to define an open economy.  An open economy is one where economic activities between domestic nations and foreign nations, can trade in goods and services with other people and businesses in the international community, and flow of funds as investment across the border.
 

Now, in a nation or country with an open economy, a few different things may occur.  The nation that does not import raw materials, but allows foreign residents to purchase their goods and service may first of all have economic problems.  Also, the other nations would not purchase as many goods and/or services and that would lead to lower profits, worse unemployment rates, and a downturn in the open economy nation.  There will also be issues if the open economy itself has a downturn in their economy. 

Short run effects on the nation’s economy if there is a significant downturn in economic activity in other nations would be that it would affect this nation’s economy negatively.  If there is a downturn in the nations they will feel a downturn as well.  When the other nation’s economy suffers, they will not buy as many of this nation’s goods and services, which will make their economy, start to fail as well.   The Aggregate Supply curve would begin to shift downward instead of upward. 

Inflation may also occur with the effects in the economy, that of the open economy, or of the other nations.  An effect that may occur when the aggregate supply curve goes down, or decreases in the short-run, is cost-push inflation. 

To counteract these negative effects and downturns in economy (of the open economy, and perhaps the other nations), the open economy could start importing raw materials, or any other productive inputs from other nations. It may not fix things in the economy at the time being, but perhaps it would help them from incurring more economic downturns in the future.