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Think about the AD-AS model presented in the last week of class. If an economy experiences a massive reduction in autonomous investment (like in question

  1. Think about the AD-AS model presented in the last week of class. If an economy experiences a massive reduction in autonomous investment (like in question 26), what would happen to equilibrium (where the AD and AS lines cross)?
    1. The price level (P) would increase and output (Y) would not change.
    2. P would decrease and Y would not change.
    3. P and Y would both decrease.
    4. P and Y would both increase.

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