Which of the following will most likely occur in the United States as the result of an unexpected rapid growth in real income in Japan and Europe?
A)a short-run increase in U.S.employment and output
B)a short-run decrease in U.S.employment and output
C)a short-run decline in prices in the United States
D)a reduction in the natural rate of unemployment in the United States

Question

Quizplus · Accepted Answer

An unexpected rapid growth in real income in Japan and Europe would lead to an increase in demand for US goods and services, leading to a short-run increase in US employment and output. This is the result of increased exports to Japan and Europe, which contributes to an increase in aggregate demand in the United States. Thus, option A is the most likely outcome. Option B and C are less likely to occur since an increase in demand for US goods and services would prevent a decline in prices and unemployment. Option D is not relevant to the given scenario.

Which of the Following Will Most Likely Occur in the United