Test Review. - In the long run, unemployment always returns...

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Number of Questions. 15 4 16 6 17 7 20 4 22 3 18 1 MB 4 30. Expected inflation remains at 3. This means that we’re working off this short run curve. Income taxes decrease aggregate demand and decrease the price level. This is correlated with a decrease in inflation. The SRPC curve will only shift if people’s expectations shift. 31. Ifinflation stays the same, then unemployment must go up.
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Unformatted text preview: In the long run, unemployment always returns to the natural rate of unemployment.*** Look for short run, long run. 32. Stagflation: Rising unemployment and inflation. They both have to rise. There is only one combination that works. 23. Draw SRAS and AD. 25, 33, 9, 12. 9. 6...
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