-In the above figure, suppose that the economy is at point A when foreign countries begin an expansion and buy more U.S.- made goods. In the short run, this change creates a movement to point and an eventual increase in .
A) D; money wage rates
B) B; the natural unemployment rate
C) B; money wage rates
D) D; the natural unemployment rate

Question

-In the above figure, suppose that the economy is at point A when foreign countries begin an expansion and buy more U.S.- made goods. In the short run, this change creates a movement to point and an eventual increase in .
A) D; money wage rates 
B) B; the natural unemployment rate 
C) B; money wage rates 
D) D; the natural unemployment rate

Quizplus · Accepted Answer

In the short run, an increase in demand for U.S.-made goods due to foreign expansion shifts the aggregate demand curve rightward, moving the economy from point A to point B. This increased demand eventually leads to higher money wage rates as firms compete for labor.

-In the Above Figure, Suppose That the Economy Is at Point