Price level and to the equilibrium level of aggregate output

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Reference no: EM13802475

Use the AS-AD model to describe what would happen to the price level and to the equilibrium level of aggregate output in the short run in the following situations:

a. The Fed buys bonds in the open market during a period of low unemployment and no excess industrial capacity.

b. The economy is far below capacity and the government raises taxes

c. The economy is at or near full capacity and the government reduces spending.

Reference no: EM13802475

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