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Exhibit 20A-2 Macro AD/AS Models

Question 8

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Exhibit 20A-2 Macro AD/AS Models
Exhibit 20A-2 Macro AD/AS Models -In Panel (b) of Exhibit 20A-2,the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂.Classical theory argues that: A) SRAS will shift to leftward and establish full employment at P₃Yp without government intervention. B) higher wages will result in a leftward shift of SRAS. C) long-run equilibrium will be established at Yp and P₃. D) all of the above will take place.
-In Panel (b) of Exhibit 20A-2,the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂.Classical theory argues that:


A) SRAS will shift to leftward and establish full employment at P₃Yp without government intervention.
B) higher wages will result in a leftward shift of SRAS.
C) long-run equilibrium will be established at Yp and P₃.
D) all of the above will take place.

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