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Consider the following figure. In this economy, the Solow growth rate is 4% per year: Inflation A SRAS rate (TT) (exp. inflation = 9%) LRAS

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Consider the following figure. In this economy, the Solow growth rate is 4% per year: Inflation A SRAS rate (TT) (exp. inflation = 9%) LRAS X% AD = M + v= 10% AD = M + v= 6% Solow Real GDP growth rate growth rate a. (4 points) Calculate the inflation rate at X in this economy. b. (4 points) If spending growth were 6% in this economy, what would the inflation rate be in the long run, assuming the Solow growth rate stays the same

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