An AD shock such as an increase in exports would:
A) shift AD to the left and reduce equilibrium Y and P.
B) shift AD to the right and increase equilibrium Y and P.
C) move the economy along the AD curve to a new equilibrium Y and P.
D) shift both Ad and AS leaving equilibrium Y and P unchanged.

Question

Quizplus · Accepted Answer

An increase in exports would lead to an increase in aggregate demand (AD) because it means that more goods and services produced domestically are being sold abroad. This increase in demand would shift the AD curve to the right, leading to a higher equilibrium output (Y) and price level (P).

An AD Shock Such as an Increase in Exports Would