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Consider an economy that is currently at full employment (at potential GDP). Illustrate this economy in an AD-AS model. Suppose that there is increased security
Consider an economy that is currently at full employment (at potential GDP). Illustrate this economy in an AD-AS model. Suppose that there is increased security about jobs and future income. a. Use your graph to show and explain what will happen to the price level, GDP and unemployment according to the Keynesian model. b. Use your graph to show and explain what will happen to the price level, GDP and unemployment according to the Neoclassical model. Note -there is the initial part and then "a" and "b" Drawings would help! Thank you
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