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Using the aggregate demand-aggregate supply model, predict what happens in the short run when there is a general decrease in raw materials cost.
Select one:
a. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases.
b. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases.
c. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase.
d. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.
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