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Suppose that the economy is currently in equilibrium at a real GDP level of $20 trillion, with a price level of 100. If there is
Suppose that the economy is currently in equilibrium at a real GDP level of $20 trillion, with a price level of 100. If there is an increase in government spending and investment, which shifts the aggregate demand curve to the right by $1 trillion at every price level, what will happen to the price level and real GDP in the short run, assuming that the aggregate supply curve is upward sloping?
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