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    Principles of Macroeconomics Study Set 11
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    Exam 16: Household and Firm Behavior in the Macroeconomy: a Further Look
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    Assume Firms Have Inventories That They Can Draw Down to Meet
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Assume Firms Have Inventories That They Can Draw Down to Meet

Question 31

Question 31

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Assume firms have inventories that they can draw down to meet an increase in demand. What impact will this have on the size of the multiplier and why?

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It will decrease the size of t...

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