Focus on short-run as well as long-run equilibrium

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Q1. Employing Figure above with equilibrium primarily at E0, assume the nominal money supply increased. We notice a shift in the AD, as seen in the above graph. If prices are flexible, please elucidate how the economy moves to a new equilibrium. Focus on short-run as well as long-run equilibrium.

Q2. If the AE curve is represented by AE = 300 + 0.5Y, a shift in the AE curve of 50 will be depicted as a shift in the AD curve of

Reference no: EM1315051

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