Explain in terms of the aggregate demand-aggregate supply, Finance Basics

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Explain in terms of the aggregate demand-aggregate supply

Suppose the policy interest rate controlled by the central bank and the inflation rate were both zero.

Explain in terms of the aggregate demand-aggregate supply framework how the economy could fall into a deflationary spiral if it were hit by a negative aggregate demand shock.

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Finance Basics: Explain in terms of the aggregate demand-aggregate supply

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Finance Basics: Explain in terms of the aggregate demand-aggregate supply

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