Suppose Canada's economy is in a long run equilibrium with real GDP equal to potential output Now suppose thers is an increase in world deinand for Canada's goods. In the short run, in the long run CHILD OA real GDP and the price level both tal, mal GDP is below its original level with a higher price level OB real GDP rises and the price level talls real GDP returns to its original level with an initial price level OC mal GDP and the price level both me, real GDP returns to its original level with a higher price level OD roar GDP talls and the price level mes, real GOP is below its orginal level with an initial price level

Suppose Canada's economy is in a long run equilibrium with real GDP equal to potential output Now suppose thers is an increase in world deinand for Canada's goods. In the short run, in the long run CHILD OA real GDP and the price level both tal, mal GDP is below its original level with a higher price level OB real GDP rises and the price level talls real GDP returns to its original level with an initial price level OC mal GDP and the price level both me, real GDP returns to its original level with a higher price level OD roar GDP talls and the price level mes, real GOP is below its orginal level with an initial price level

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter21: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 2TY

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