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Business, 04.08.2019 06:40 Anshuman2002

Why, in principle, would one expect the ad curve to be vertical? one expects the ad curve to be vertical because when the price level rises, people's real wealth also rises, which offsets the negative effect that a higher price level has on the quantity of aggregate demand. all prices rise together. that is, since wages have risen as much as prices for consumer goods, no relative prices have changed and therefore people's decisions to consume should not change either. nominal interest rates also rise, which offsets the negative effect that a higher price level has on the quantity of aggregate demand?

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