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1. What impact would an increase in AD, in the vertical range of AS, will have...

1. What impact would an increase in AD, in the vertical range of AS, will have on GDP and the price level according to the AD/AS model? Explain the reasons to score high marks.

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2.. If the economy is operating in the short run AS curve and aggregate demand falls, what is likely to happen to real GDP, Price level, Unemployment and why? Would you suggest the economy will face a recessionary gap or inflationary gap?

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