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Unformatted text preview: a. Real GDP falls by at least 1.2 percent again this quarter b. Real GDP also falls over the next three quarters c. Real GDP also falls in the next quarter d. Real GDP fails to grow by at least 1.2 percent in the next quarter 5. When do substitution effects play a role in Aggregate Demand for Japan a. Never b. When investment by Japanese firms substitutes for consumption by Japanese households c. When Japanese consumers buy a cheaper domestically made good instead of a more expensive one d. When Japanese households buy imports rather than domestically made goods B. Short Answer (5 points) Please answer the following briefly but completely. 1. How does the GDP deflator differ from the CPI? 2. Use Aggregate Supply and Aggregate Demand to show what happened to the Japanese economy as a result of the large growth in economic activity in China. 3. Why dont intermediate goods count when we compute GDP?...
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