How is a nation’s trade balance related to its net inflow of foreign capital? If an economy provides more attractive investment opportunities than are available in other countries, how will this tend to influence its trade balance?

*16. The following chart indicates the aggregate demand

(AD) and short-run aggregate supply (SRAS) schedules of decision makers for the current period. Both buyers and sellers previously anticipated that the price level during the current period would be P105.

a. Indicate the quantity of GDP that will be produced during this period.

b. Will it be a long-run equilibrium level of GDP?

Why or why not?

c. What will the relationship between the actual and natural rates of unemployment be during the period? Explain your answer.