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Unformatted text preview: o if prices are lower than anticipated, output decreases Shifts of the LRAS Curve 1. quantity of capital and labor 2. productivity Neutrality of Money An increase in AD shifts the AD curve up to the right. Equilibrium moves from point A to B in the short run as prices were higher than expected. Costs will eventually rise as well. So, the SRAS curve will shift up to the left. Long-run equilibrium is always on the LRAS curve at potential GDP. money is neutral - has no effects on the real variable Y and the level of employment...
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This note was uploaded on 11/22/2011 for the course FIN FIN1100 taught by Professor Bradrifkin during the Fall '09 term at Broward College.
- Fall '09
- Personal Finance