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objective is to understand the problem On the following graph, shift one or both curves to reflect the short-run effect of the fall in government

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objective is to understand the problem

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On the following graph, shift one or both curves to reflect the short-run effect of the fall in government purchases. Aggregate Supply Aggregate Demand Aggregate Supply Price Level Aggregate Demand Quantity of Output On the following graph, shift a curve or adjust the point to reflect the short-run effect of the fall in government purchases. RPC SRPC Short-Run Outcome Inflation Rate O LRPC SRPC Unemployment Rate In the short run, inflation falls * and unemployment rises Now suppose that over time, expected inflation changes in the same direction that actual inflation changes. On both of the preceding graphs, shift the appropriate curve or curves to reflect the change that brings the economy to its long-run state. After the recession is over, the economy faces a better set of inflation-unemployment combinations

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