Question

Prior to international trade, Guava Island's equiLiBrium GDP was $700 million. What is the value of equiLiBrium GDP after Guava Island engages in international trade?

Answer 1

To determine the value of equilibrium GDP after Guava Island engages in international trade, we need more information about the changes in exports and imports.

Step-by-step explanation:

Equilibrium GDP refers to the level of GDP where aggregate demand (AD) equals aggregate supply (AS). To determine the value of equilibrium GDP after Guava Island engages in international trade, we need more information about the changes in exports and imports.

If exports increase, it will lead to an increase in aggregate demand, thereby increasing the equilibrium GDP. Conversely, if imports increase, it will lead to a decrease in aggregate demand, thereby decreasing the equilibrium GDP.

Without specific information about the changes in exports and imports, it is not possible to determine the new value of equilibrium GDP.