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The Short-Run Aggregate Supply Curve
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Question 1 of 3
What happens in the short run when spending increases?
Increased spending doesn’t immediately cause full inflation, so there is short run growth.
Increased spending immediately causes inflation, so there is no growth.
More spending makes prices sticky, so inflation skyrockets in the short run.
More spending makes prices more volatile, so inflation drops and often turns into deflation.
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Principles of Macroeconomics
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