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(a) Country A is in long-run equilibrium. Suppose that an economic boom overseas causes foreigners to buy more goods from Country A. (i) ExplainitsimpactstoAD,SRASandLRAS. (2marks)

(a)

Country A is in long-run equilibrium. Suppose that an economic boom overseas causes foreigners to buy more goods from Country A.

(i) ExplainitsimpactstoAD,SRASandLRAS. (2marks)

(ii) Use an AD-AS diagram to illustrate what happens to output and the price level in

the short run. (2 marks)

(iii) Explain how the economy would move from the short-run to the long-run

equilibrium.

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