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Suppliers will collectively react to changes in their macroeconomic environment....

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Suppliers will collectively react to changes in their macroeconomic environment. In the AD-AS framework, these reactions are modelled differently depending on the type of variable.

Associate the appropriate modelling with the given "shocks".

A Natural Disaster strikes the country, such as a massive earthquake

Increase in Price of inputs, such as electricity

Decrease in the number of producers

Aggregate Demand suddenly reduces. Inventories are high and remain unsold. Orders are reduced.

Increase in the number of producers

Aggregate Demand suddenly increases. Inventories are low and sales are high. Orders are increased.

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