Show the effect of the decline in income in europe

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Assume that the economy is initially in equilibrium at potential GDP. Suppose that there is a decrease in income in Europe that causes a decrease in demand for U.S.-produced goods. Use an AD-AS graph to show the effect of the decline in income in Europe on output and the price level in the United States in the short run and in the long run.

Reference no: EM131303809

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