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If the economy is operating on the upward sloping portion of the short-run aggregate supply (SAS) curve, show that an increase in aggregate demand (AD)

  1. If the economy is operating on the upward sloping portion of the short-run aggregate supply (SAS) curve, show that an increase in aggregate demand (AD) from expansionary fiscal policy will result in an increase in both real income (Y) and the price level (P).

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