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

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. As a result of this,

A) real GDP is temporarily above potential output.
B) the economy's potential output increases to Y₂.
C) the economy moves to a new long-run equilibrium at point B.
D) there is some cyclical unemployment.