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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

The AD/AS model is static. It shows a snapshot of the economy at a given point in time. Both economic growth and inflation are dynamic phenomena. Suppose economic growth is Chapter 24, Problem 53CTQ, The AD/AS model is static. It shows a snapshot of the economy at a given point in time. Both per year and aggregate demand is growing at the same rate. What does the AD/AS model say the inflation rate should be?

To determine

Impact on inflation due to economic growth is to be determined.

Explanation

As economy is growing at 3% per annum, it means demand for goods and services will increase. Economic growth is a positive indicator as economy will move towards potential GDP growth...

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