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Using AD/AS and the Total Expenditure system, explain and graphically depict the effect of an increase in Government purchases of goods and services (G) when the economy is at full-employment. Distinguish between the short-run and the long-run effects of this fiscal contraction on output (Y) and the price level (P). Explain the adjustment process the economy goes through to get back to long run equilibrium
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Using AD/AS and the Total Expenditure system, explain and graphically depict the effect of an increa...
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