-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 afterwards an eventual increase in ________.
A) B; money wage rates
B) D; the natural unemployment rate
C) B; the natural unemployment rate
D) D; money wage rates

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 afterwards an eventual increase in ________.
A) B; money wage rates 
B) D; the natural unemployment rate 
C) B; the natural unemployment rate 
D) D; money wage rates

Quizplus · Accepted Answer

An increase in demand for U.S.-made goods by foreign countries would initially move the economy to a higher aggregate demand, leading to higher output and employment, represented by a move from point A to point B. Over time, the increased demand can lead to higher money wage rates as the labor market tightens, making choice A correct.

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