Suppose that an economy begins in equilibrium at E, as depicted in the graph to the right. Assume that the economy follows the Classical Model assumptions. a. Using the line drawing tool, draw a new aggregate demand (AD) curve reflecting a decrease in the amount of money in circulation. Properly label this line. 140 130- 120- 110- LRAS

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Suppose that an economy begins in equilibrium at E, as depicted in the graph to
the right.
Assume that the economy follows the Classical Model assumptions.
a. Using the line drawing tool, draw a new aggregate demand (AD) curve
reflecting a decrease in the amount of money in circulation. Properly label this line.
Carefully follow the instructions above, and only draw the required objects.
Price level
140-
130-
120-
110-
100-
90-
80-
70-
60-
LRAS
E₁
10 12
Real GDP ($ trillions)
AD
14
Transcribed Image Text:Suppose that an economy begins in equilibrium at E, as depicted in the graph to the right. Assume that the economy follows the Classical Model assumptions. a. Using the line drawing tool, draw a new aggregate demand (AD) curve reflecting a decrease in the amount of money in circulation. Properly label this line. Carefully follow the instructions above, and only draw the required objects. Price level 140- 130- 120- 110- 100- 90- 80- 70- 60- LRAS E₁ 10 12 Real GDP ($ trillions) AD 14
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