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Consider the accompanying diagram and fill in the blanks in the paragraph below.

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Initially, the economy is in long-run equilibrium at Point A with a price level of
Select Option 100120
and producing
Select Option above potential GDPbelow potential GDPat potential GDP
. Suppose there was a substantial increase in the money supply. As a result,
Select Option aggregate demandaggregate supply
would shift to the right because of higher investment spending stimulated by lower
Select Option interest ratesoutputemployment
. The economy would move to
Select Option Point APoint BPoint C
in the diagram.
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