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b) CPI AD AS 120 115 110 E1 105 100 95 0 1300 1400 1500 GDP ($000) Refer to the AD-AS model and use the

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b) CPI AD AS 120 115 110 E1 105 100 95 0 1300 1400 1500 GDP ($000) Refer to the AD-AS model and use the data shown. You do not need to draw on the diagram or to submit it but describe the shifts of the AD, AS curves and indicate what is the new CPI and GDP if the Reserve Bank decides to DECREASE money supply? 2 marks (3 marks + 2 marks = 5 marks)

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