9 Nov 2021
Problem 31
Page 600
Section: REVIEW QUESTIONS
Chapter 24: The Aggregate Demand/Aggregate Supply Model
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9 Nov 2021
Introduction
As a result of monetary authority being used in the economy's output, the aggregate demand curve has shifted to the right. At the price level where aggregate output demand equals aggregate output supply, equilibrium is achieved. However, when the aggregate demand curve intersects the long-run aggregate supply curve, which is potential at the vertical GDP curve, equilibrium occurs at the price level.
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