Use dynamic aggregate supply and demand analysis

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For which of the following would you use dynamic aggregate supply and demand analysis? The alternative would be static aggregate supply and demand analysis. There might be more than one answer.

1) If government purchases increases, does real GDP grow or shrink

2) The economy is currently growing at 2%. Would the growth rate be more if the Fed lowered the federal funds rate?

3) Does the price level rise or fall if taxes fall?

4) The current inflation is about 1%. If taxes fell, would the inflation rate rise?

Reference no: EM131112233

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