Using the aggregate demand curve and the inflation adjustment line, describe what would happen to real GDP

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Using the aggregate demand curve and the inflation adjustment line, describe what would happen to real GDP and inflation in the short run, in the medium run, and in the long run if the government increased spending permanently. Assume that the economy was initially at potential output before the increase. Be sure to provide an economic explanation for your results.

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Principles Of Macroeconomics

ISBN: 9781453334980

9th Edition

Authors: John B. Taylor, Akila Weerapana

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