The economy is at point A in the accompanying diagram. Suppose that the aggregate price level rises

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The economy is at point A in the accompanying diagram. Suppose that the aggregate price level rises from P1to P2. How will aggregate supply adjust in the short run and in the long run to the increase in the aggregate price level? Illustrate with a diagram.

LRAS Aggregate price level SRAS, P2 P1 Y1 Real GDP

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Macroeconomics

ISBN: 978-1319120054

3rd Canadian edition

Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson

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