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As shown in the figure below, if people behave according to rational expectations theory, an increase in the aggregate demand from A D 1 to
As shown in the figure below, if people behave according to rational expectations theory, an increase in the aggregate demand from to will cause the price level to move:
a directly from to and then remain at
b directly from to and then remain at
c from to initially and then eventually move back to
d from to initially and then eventually move to
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