The economy is experiencing a temporary economic boom but cannot last since the intersection is to the right of long-run aggregate supply. Output and resource prices will rise, but with sufficient time for the adjustment of all prices output will fall back to the level of long-run aggregate supply due to higher resource prices.

Because they score higher in general.

As output increases and thus incomes increase, individuals will wish to make more purchases, and money demand increases.

One of the many ways ROE can be expressed is: ROE = Net Income/Equity .12 =
$ 10,000,000/Equity Equity = $10,000,000/.12 = $83,333,333.