Refer to the Information Provided in Figure 12

question 189

Multiple Choice

Refer to the information provided in Figure 12.2 below to answer the questions that follow. Figure 12.2
-Refer to Figure 12.2. Firms respond to a decrease in net taxes by mostly raising their prices when the aggregate demand curve shifts from

• A) AD₁ to AD₂.
• B) AD₃ to AD₄.
• C) AD₅ to AD₆.
• D) AD₆ to AD₁.

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Definitions:

Export Supply Curve

An upward sloping curve that shows the amount of a product that domestic firms will export at each world price that is above the domestic price.

Import Demand Curve

A downsloping curve showing the amount of a product that an economy will import at each world price below the domestic price.

Terms of Trade

The ratio at which a country can trade its exports for imports from other countries, reflecting the relative prices of exports and imports.

Gains from Specialization

The increase in overall production and efficiency that occurs when individuals or entities focus on specific tasks or functions they perform best.