7 . Economic fluctuations I The following graph shows the economy in long-run equilibrium at the expected
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7 . Economic fluctuations I
The following graph shows the economy in long-run equilibrium at the expected price level of 120 and the natural level of output of $600 billion. Suppose firms become pessimistic about future business conditions and cut back on investment spending.
Shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-runimpact of the business pessimism.
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/6685a20942406_8016685a2092b402.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/6685a2097f8dd_8016685a2096da15.jpg)
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