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Business, 12.08.2020 07:01 princess5964
Suppose the economy starts out at point A. Next, the public anticipates that the Fed will use expansionary monetary policy to shift the AD curve from AD1 to AD2. What happens, instead, is that the Fed does not raise aggregate demand as much as the public expects (bias upward). Instead the Fed pushes the AD curve from AD1 to AD3. As a result, according to new classical theory in the short run the economy moves to point:.
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Suppose the economy starts out at point A. Next, the public anticipates that the Fed will use expans...
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