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Question 8 2 pts Suppose there is a massive drop in investment. According to the lecture slides, which of the following would
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Answer #1

(8) (A)

Decrease in investment will decrease aggregate demand. AD curve shifts left, decreasing price level (lowering inflation) and decreasing real GDP. Lower real GDP decreases output and increases unemployment.

(9) (B)

Higher oil price decreases aggregate supply. AS curve will shift left, increasing price level and decreasing real GDP, causing stagflation.

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