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Removing the output gap in self-adjusting mechanism and its impact on the price level and output.

Use an aggregate demand (AD) and aggregate supply (AS) model in which the short run aggregate supply curve slopes upwards to illustrate the equilibrium level of real GDP and prices if the economy is operating: If the economy is not self-adjusting but a deliberate monetary policy is proposed to remove the output gap, how this process would be different than self-adjusting mechanism i.e. Illustrate what curve or curves would shift and why? What would be after adjustment impact on the price level and output?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M921393

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