Use the following to answer questions . Exhibit: Short-run Aggregate Supply -(Exhibit: Short-run Aggregate Supply) 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.

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An increase in net exports will increase aggregate demand, causing real GDP to temporarily rise above potential output, leading to an economic expansion in the short run.

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