The economy starts in a long-run equilibrium where aggregate demand, short run aggregate supply, and long-run aggregate
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The economy starts in a long-run equilibrium where aggregate demand, short run aggregate supply, and long-run aggregate supply all meet. Suppose a decrease in investment occurs, holding all else constant. As a result, real GDP will ________ in the short run, and ________ in the long run, assuming no policy intervention.
increase; increase further
decrease; increase to its initial level
increase; decrease to its initial value
decrease; decrease further
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