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Use the following diagrams for the U.S. economy to answer the following question. AS AS ASZ AS, Level Price Level Price Level
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Answer #1

Ans. A. Diagram (A)

When resources and productivity of the goods and services increase in the US economy that leads to increase in the efficiency of production in the US economy, aggregate supply increases, and aggregate supply curve shifts rightward. Therefore, the equilibrium price level falls and the equilibrium real domestic output increases when aggreagte supply curve shifts rightward.

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