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Exhibit 17-2 Aggregate Demand and Aggregate Supply Curves as Shown

question 88

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Exhibit 17-2 Aggregate demand and aggregate supply curves Exhibit 17-2 Aggregate demand and aggregate supply curves   As shown in Exhibit 17-2, if people behave according to rational expectations theory, an increase in the aggregate demand curve from AD<sub>1</sub> to AD<sub>2</sub> will cause: A) labor to adjust nominal wages sluggishly. B) the aggregate supply curve to remain at SRAS<sub>1</sub>. C) the price level to eventually rise from 100 to 110. D) none of these. As shown in Exhibit 17-2, if people behave according to rational expectations theory, an increase in the aggregate demand curve from AD1 to AD2 will cause:


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