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suppose recent wave of pessimism engulfs consumers and firms, causing them of reduce their expenditures a. demonstrate their event using the model of aggregate demand

suppose recent wave of pessimism engulfs consumers and firms, causing them of reduce their expenditures

a. demonstrate their event using the model of aggregate demand and aggregate supply and assuming that the economy was originally in long -run equilibrium.

b. what is the appropriate activist fiscal policy response in this regard ? in which direction would the activist policy shift aggregate demand ? use diagram

c. Did the activist fiscal policy destabilize the economy ?explain and use diagram

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