The economy is currently in equilibrium at full employment, Business Economics

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The economy is currently in equilibrium at full employment

The economy is currently in equilibrium at full employment. Suppose that the Fed increases money supply growth by 5 percent.

1. Using an aggregate demand and supply graph, explain exactly what happens and why to aggregate output (real GDP) and the inflation rate in the short run.

2. Using the same aggregate demand and supply graph, explain exactly what happens and why to aggregate output (real GDP) and the Inflation rate in the long run.

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Business Economics: The economy is currently in equilibrium at full employment

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