1. Suppose that the economy is initially in equilibrium at potential GDP. If there is a decrease in aggregate demand, use an AD-AS graph to show the effects on the price level and the output level in the short run and in the long run.
2. Briefly explain whether the adjustment by the economy from short-run equilibrium to longrun equilibrium is more rapid in the new classical view or in the new Keynesian view.
3. What is monetary neutrality?
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