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Panel (b) A decrease in aggregate demand 1.20 1.18 1.16 1.14 1.12 AD1 AD2 1.10 $11,600 11,800 12,000 12,200 12,400 12,600 -00QUESTION 3 3 points Save Answer Look at Panel (b) of Figure 7.2. Suppose the curve AD1 is the aggregate demand curve in year

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Answer #1

At AD1, P= 1.14

At AD2, P=1.18

Inflation rate = (1.18-1.14)*100/1.14= 3.51%

Answer : 3.51

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