-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) 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 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 increase aggregate demand, moving the economy from point A to point B in the short run. This leads to higher output and employment levels, which can eventually increase money wage rates as the labor market tightens.

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