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Explain How the Static Aggregate Demand and Aggregate Supply Model

Question 252

Essay

Explain how the static aggregate demand and aggregate supply model gives us misleading results about the price level,particularly with respect to decreases in aggregate demand.Describe how the aggregate demand curve is different in the dynamic model as compared to the static model.Describe how potential GDP is different in the dynamic model as compared to the static model.

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The static model incorrectly predicts th...

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