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Assume a situation where both the short-run aggregate supply and the long-run aggregate supply are increasing, but at different rates. If the short-run aggregate supply
Assume a situation where both the short-run aggregate supply and the long-run aggregate supply are increasing, but at different rates. If the short-run aggregate supply increases by less than the long-run aggregate supply, then, at the short-run equilibrium
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GDP will be below potential GDP.
GDP will be equal to potential GDP.
aggregate demand will increase.
GDP will be above potential GDP.
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