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The AS-AD model with inflation
When we remove assumption of constant prices to allow varying real wages. Resulting model was known as AS-AD model. Similarly we now remove the assumption that Π = Πw (but Π may only deviate from Πw temporarily and they should be equal on the average).
While referring to the "EYE on YOUR LIFE" section on page 183 of the textbook, apply this concept to your life. Develop your own policy position on price floors and price ceilings.
What does the United States do better than other countries?
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