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In the Complete Model, the Economy Moves Back to Potential

Question 48

Multiple Choice

In the complete model, the economy moves back to potential GDP via


A) gradual adjustment of the price level to restore spending to the level consistent with full employment.
B) gradual shifts of the aggregate demand schedule due to increased investment spending that results from changes in the price level.
C) gradual shifts of the aggregate demand schedule due to increased net export spending that results from changes in the price level.
D) gradual movements in potential GDP that eventually bring it in line with the actual level of real GDP.
E) none of the above.

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