Exhibit 5-3
-In Exhibit 5-3 AD₁ and AS₁ represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Mexico rises,what will the new equilibrium be?

Question

Exhibit 5-3 Exhibit 5-3 -In Exhibit 5-3 AD<sub>1</sub> and AS<sub>1</sub> represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Mexico rises,what will the new equilibrium be? A) A B) B C) C D) D E) E

Exhibit 5-3 -In Exhibit 5-3 AD<sub>1</sub> and AS<sub>1</sub> represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Mexico rises,what will the new equilibrium be? A) A B) B C) C D) D E) E

-In Exhibit 5-3 AD₁ and AS₁ represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Mexico rises,what will the new equilibrium be?

Quizplus · Accepted Answer

An increase in the price level in Mexico will cause a decrease in net exports, shifting the aggregate demand curve to the left. The new equilibrium will be at point B with a lower price level and lower real GDP.

Exhibit 5-3 -In Exhibit 5-3 AD1 and AS1 Represent the Initial Aggregate

Exhibit 5-3 -In Exhibit 5-3 AD₁ and AS₁ Represent the Initial Aggregate