=+a. Let pR be defined as the price of $1 of consumption in the event that a

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=+a. Let pR be defined as the price of $1 of consumption in the event that a recession occurs and let pE be the price of $1 of consumption in the event that an economic expansion occurs. Explain why we can simply normalize pR 5 1 and then denote the price of $1 of consumption in the event of expansions as pE 5 p.

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