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Suppose that the equation for a particular short-run AS curve is P = 20 + 0.5Q, where P is the price level and Q is real output in dollar terms.
a. What is Q if the price level is 140?
b. Suppose that the Q in your answer is the full-employment level of output.
By how much will Q increase in the short run if the price level unexpectedly rises from 140 to 160?
By how much will Q increase in the long run due to the price level increase?
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