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Use the Dynamic Aggregate Demand and Aggregate Supply Model and Start

Question 168

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Use the dynamic aggregate demand and aggregate supply model and start with Year 1 in long-run macroeconomic equilibrium.For Year 2, graph aggregate demand, long-run aggregate supply, and short-run aggregate supply such that the condition of the economy will induce the Bank of Canada to conduct a contractionary monetary policy.Briefly explain the condition of the economy and what the Bank of Canada is attempting to do.

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The Bank of Canada conducts a contractio...

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