What happens in Freezone if the central bank lowers the federal funds rate? Do you recommend that
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Figure 17.3 shows the aggregate demand curve, AD, and the short-run aggregate supply curve, AS, in the economy of Freezone. Potential GDP is $300 billion.
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FIGURE 17.3 Chapter Checkpoint Assignable Problems 6 to 9 Price level (GDP price index) 140 130 AS 120 110 100 AD 200 300 500 100 400 Real GDP (billions of 2009 dollars)
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