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Based on the figure above, the self-correcting mechanism will return the economy to potential GDP

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Based on the figure above, the self-correcting mechanism will return the economy to potential GDP

Based on the figure above, the self-correcting mechanism will return the economy to potential GDP
A) when aggregate demand decreases so that AD intersects AS at point B.
B) when AD increases and AS decreases, intersecting at point C.
C) when contracts are renegotiated and higher wage rates and other resource prices shift the AS curve through point D.
D) when lower wage rates and other resource prices shift the AD down through point B.
E) when contracts are renegotiated and lower wage rates and other input prices shift the AS curve through point D.

Textbook

Introduction to Economic Reasoning

Edition: 8^th

Author: Rohlf

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