Advanced Placement (AP), 17.03.2020 20:08 jadenhoughton

If the degree of excess capacity decreases at the same time nominal interest rates decrease, in the short-run we can expect that

aggregate demand will shift right increasing output and employment.

aggregate demand will shift left increasing output and employment.

aggregate demand will shift right decreasing output and employment.

aggregate supply will shift left decreasing output and employment.

aggregate supply will shift right increasing output and employment. (wrong)

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If the degree of excess capacity decreases at the same time nominal interest rates decrease, in the...