Figure 7-3 -Refer to Figure 7-3. Suppose that the economy is in long-run equilibrium at point A. Now suppose net exports increase. What happens in the long-run, all other things unchanged? A) The economy will return to its initial equilibrium at point A. B) Equilibrium will be re-established at point B with a higher potential output. C) Equilibrium will be re-established at point E at a higher price level. D) The aggregate demand curve will shift back to AD₁.

Question

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The Answer of Figure 7-3 -Refer to Figure 7-3. Suppose that the economy is in long-run equilibrium at point A. Now suppose net exports increase. What happens in the long-run, all other things unchanged? A) The economy will return to its initial equilibrium at point A. B) Equilibrium will be re-established at point B with a higher potential output. C) Equilibrium will be re-established at point E at a higher price level. D) The aggregate demand curve will shift back to AD₁.

Figure 7-3 -Refer to Figure 7-3. Suppose That the Economy Is in Economy