Figure 7-3 -Refer to Figure 7-3. Suppose That the Economy Is in Economy

question 114

Multiple Choice

Figure 7-3
-Refer to Figure 7-3. Suppose that the economy is in long-run equilibrium at point A. Now suppose net exports increase. What happens in the long-run, all other things unchanged?

• A) The economy will return to its initial equilibrium at point A.
• B) Equilibrium will be re-established at point B with a higher potential output.
• C) Equilibrium will be re-established at point E at a higher price level.
• D) The aggregate demand curve will shift back to AD₁.

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Definitions:

Movie Rental

A service that allows consumers to temporarily access films for a fee without purchasing them outright.

Marginal Utility

The extra pleasure or advantage (utility) a person receives from using an additional unit of a product or service.

Marginal Utility

The additional satisfaction or benefit received from consuming one more unit of a good or service.

Movie Rental

The practice of paying a fee to borrow a film for a limited period, traditionally through physical stores, or digitally via online platforms.