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Suppose that an increase in business confidence causes an increase in firms' desire to invest. (a) Start with an AD-IA diagram without any government intervention.

Suppose that an increase in business confidence causes an increase in firms' desire to invest. (a) Start with an AD-IA diagram without any government intervention. Please show in your diagram and explain in words what would be the short-run, medium-run and long-run changes in real GDP and inflation. Assume that the economy was at potential GDP prior to the increase in business confidence

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