What happens to the ad curve and real gdp
Problem: If the Federal Reserve increased the money supply so that the 112.5 changes to 125 in the AD equation, what happens to the AD curve, equilibrium real GDP, and the consumer price index? Explain.
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Let LRAS equal the long run aggregate supply curve and AD equal the aggregate demand curve. In equation format, we have LRAS:
what happens to the AD curve, equilibrium real GDP, and the consumer price index? Explain.
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