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Draw aggregate demand and supply diagrams for each of the following scenarios and identify in each case the impact on inflation and output. a) The economy is in equilibrium. There is suddenly an

Draw aggregate demand and supply diagrams for each of the following scenarios and identify in each case the impact on inflation and output. a) The economy is in equilibrium. There is suddenly an increasing inflow of remittances in the country (money send to households by their relatives living abroad) and hence consumption increases. What will be the effect on the economy. 5 b) The economy is in equilibrium. Real wages increase by 5%, but still slower than prices. What will be the effect on the economy?

Apr 12 2021 View more View Less

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