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Consider a standard AD-AS model. Suppose the economy starts at an initial long run equilibrium with We : 7r* and Y : Y* when it
Consider a standard AD-AS model. Suppose the economy starts at an initial long run equilibrium with We : 7r* and Y : Y* when it is hit by both a demand shock ED and a supply shock 53- In the short run equilibrium, we nd that 7r > 71\"\" and Y > Y* . This suggests that the \"dominant\" shock was an adverse supply shock, 85>0. True or False? Explain
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