Suppose that the representative firm needs to use its net, Business Economics

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Suppose that the representative firm needs to use its net

Suppose that the representative firm needs to use its net worth as collateral to finance its investment projects. When net worth is high, the firm has more collateral and can invest more. When net worth is low, the firm has less collateral and must decrease investment. Using the AS and AD curves, explain why GDP will fall.

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Business Economics: Suppose that the representative firm needs to use its net

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