Presume that the economy is in long-run equilibrium

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Presume that the economy is in long-run equilibrium. For each of the following two scenarios describe what happens to aggregate demand, price level, and output and illustrate your answer with a graph.

1. People decide to spend more time at home instead of out visiting amusement parks, seeing movies, and doing other things.

2. Favourable tax policy and low interest rates cause businesses to increase their purchases of investment goods.

Reference no: EM13686784

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