Show the current condition of the economy using a correctly

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Assume the economy is facing falling prices and rising unemployment.

a. Show the current condition of the economy using a correctly labeled AD/AS model

b. The government decides to increase an investment tax credit. Show the impact on the real interest rate using a correctly labeled graph.

c. Explain how the results of part b impact investment

d. i. Consider your answer in part (c ) about the impact on investment: what effect would this have on AD. Explain, do not show.

ii. Consider your answer in part ( c ) about the impact on investment: what effect would this have on aggregate supply in the long run. Explain, do not show

Reference no: EM132505206

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