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If aggregate demand decreases and takes the economy away from its long-run Phillips Curve, what mechanism will allow the economy to self-adjust back to the
If aggregate demand decreases and takes the economy away from its long-run Phillips Curve, what mechanism will allow the economy to self-adjust back to the long-run Phillips Curve? Multiple choice question. Government fiscal policy that reduces the unemployment rate Nominal wages falling as the inflation expectations of firms and workers rise Nominal wages rising as the inflation expectations of workers and firms also rise Nominal wages falling as workers and firms lower their inflation expectations
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