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Suppose that the aggregate demand (ADI) curve in an economy is Y = 10,000 - 10,000
,current inflation ( 11ec9ae2_bd79_1ce7_a39a_a9c7bc0c6307_TB34225555_11 ) equals 0.05 (5%) ,and potential output (Y*) equals 9,500.If,starting from long-run equilibrium,an aggregate supply shock reduces potential output to 9,300,in the short run,there will be a(n) ___________ gap and,in the long run,inflation will equal _________.
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Decreased
Decreased means to lessen in size, amount, severity, or intensity.
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