An increase in net exports would involve a short-run shift in ____ and a long-run shift in
A) AD, AD.
B) AD, AS.
C) AS, AD.
D) AS, AS.

Question

Quizplus · Accepted Answer

In the short run, an increase in net exports raises aggregate demand (AD) because it means more foreign demand for a country's goods and services. In the long run, this can lead to an increase in aggregate supply (AS) as firms increase capacity to meet the higher demand.

An Increase in Net Exports Would Involve a Short-Run Shift