The graphical analysis presented in Figure 2 applies only to the case where there is zero economic g

The graphical analysis presented in Figure 2 applies only to the case where there is zero economic g

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The graphical analysis presented in Figure 2  applies only to the case where there is zero economic  growth, and the economy is already at the natural level of real GDP when aggregate demand  increases. In the case where the economy is not fully employing all of its input resources and has  therefore not yet attained its natural level of real GDP, an increase in aggregated demand—depicted  in Figure 3  as a shift from  AD 1  to  AD 2 —causes both an increase in the equilibrium price level from  P to  P 2 , and an increase in the equilibrium level of real GDP from 
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This note was uploaded on 11/18/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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The graphical analysis presented in Figure 2 applies only to the case where there is zero economic g

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