In the tiny island nation of Bongo, the nations wealth is broken down as follows: 50 percent

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In the tiny island nation of Bongo, the nation’s wealth is broken down as follows: 50 percent is cash in checking and savings accounts, 25 percent is housing, and 25 percent is stock holdings. Last year, Bongo experienced an inflation rate of 25 percent, and housing prices and stock prices each increased by 10 percent. Explain what happened to real wealth in Bongo last year, and how this change in real wealth helps explain the downward slope of the aggregate demand curve.

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Principles of Macroeconomics

ISBN: 978-0134078809

12th edition

Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster

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