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Suppose that the economy is initially at point 2 on the graph. The government then decides to engage in a policy intervention, boosting spending and

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Suppose that the economy is initially at point 2 on the graph. The government then decides to engage in a policy intervention, boosting spending and reducing taxes on business. Which point describes a possible equilibrium after these actions? GDP deflator AS, AS, AS 3 2 3 5 6 > 8 9 AD, AD 3 AD Real GDP Figure 1: Aggregate Demand and Aggregate Supply Curves, with potential GDP)

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