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Suppose that the economy is undergoing a recession because of a fall in aggregate demand. Using an aggregate-demand/aggregate-supply diagram, depict...


1. Suppose that the economy is undergoing a recession because of a fall in aggregate demand.
a. Using an aggregate-demand/aggregate-supply diagram, depict the current state of the economy.
b. What is happening to the unemployment rate?
c. Use the sticky-wage theory of aggregate supply to explain what will happen to output and the price level in the long-run

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