Refer to the Following Figure When Answering the Following Questions

question 75

Multiple Choice

Refer to the following figure when answering the following questions.
Figure 14.3: AS/AD Model
-Consider Figure 14.3. If the economy begins in its long-run equilibrium and there is an increase in the economy's financial friction, the economy would move from point ________ to point ________.

• A) c; d
• B) a; d
• C) b; c
• D) d; a
• E) Neither curve would shift.

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Definitions:

Specialization

Specialization refers to the process of focusing effort and resources on the production of a particular product or a limited scope of products, leading to increased efficiency.

Specialization and Trade

The economic strategy where individuals or nations focus on producing specific goods or services and exchange them, increasing efficiency and wealth.

Jack-of-all-trades

An individual skilled in many different areas, capable of performing competently in a variety of tasks or professions.

Net Exports

The difference between a country's total value of exports and total value of imports. If exports exceed imports, net exports are positive; if imports exceed exports, net exports are negative.