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We Can Use the Aggregate Demand and Supply Model to Think

question 63

Essay

We can use the aggregate demand and supply model to think about the long run as well as the short run.Using this framework, show the effects of (1) long-run growth in the money supply, and (2) long-run growth in GDP.Show that if the economy is growing, then the price level might fall over time even if the money supply is growing.


Definitions:

Damages

Monetary compensation awarded to a party in a lawsuit for loss or injury suffered as a result of another party's actions.

Torn Condition

The state of being ripped or damaged, usually referring to physical items like paper or fabric.

Dislocated

Often referring to workers who have lost their jobs due to economic changes, making it difficult for them to find equivalent employment.

Sue

to bring a legal action against someone in order to obtain a remedy or compensation.

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