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Assume that japan macroeconomic equilibrium

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a) Assume that Japan's macroeconomic equilibrium is equal to the potential GDP. As consumers around the world become more environmentally aware, there is an increase in the demand for Japanese hybrid cars. Using AD-AS model, explain carefully the immediate and long term effects of the event towards the economy. Draw by hand the appropriate AD-AS diagram to support your explanation.

Reference no: EM131981586

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