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Draw a conventional aggregate demand curve on a graph. Then add three different aggregate supply curves, labeled AS 1: Horizontal curve AS 2: Upward-sloping curve
Draw a conventional aggregate demand curve on a graph. Then add three different aggregate supply curves, labeled
AS1: Horizontal curve
AS2: Upward-sloping curve
AS3: Vertical curve
all intersecting the AD curve at the same point.
If AD were to increase (shift to the right), which AS curve would lead to
(a) The biggest increase in output?
(b) The least inflation?
(c) The largest jump in prices?
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