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Answer the following questions regarding AD-AS model. (a) Why is the short run aggregate supply horizontal? List one theory that explains this phenomenon. (b) Why

Answer the following questions regarding AD-AS model.

(a) Why is the short run aggregate supply horizontal? List one theory that explains this phenomenon.

(b) Why is the long run aggregate supply vertical?

(c) What is the impact on price and output from a negative aggregate demand shock in the long and the short run given what we know about aggregate supply in the short run and long run?

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