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This question is for 10 marks - NO NEED TO DRAW THE GRAPH Suppose an industrial nation, which produces at its long-run equilibrium level of

This question is for 10 marks - NO NEED TO DRAW THE GRAPH

Suppose an industrial nation, which produces at its long-run equilibrium level of income, experiences a supply shock causing stagflation. Suppose the government is too impatient to wait for prices to fall but rather uses expansionary monetary policy to speed up the recovery of the economy. Explain the result of this with reference to a graph using aggregate demand and supply curves.

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