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Assume that Country X is in the long term equilibrium at the end of 2011. The ...
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Assume that Country X is in the long term equilibrium at the end of 2011.
The initial long term equilibrium is represented by AD1 and AS1.
In 2012, Country X is experiencing an temporary unfavourable shock to the AS due to increasing oil prices. Such that,
Assuming that no other change or policy takes place, which point or points on the diagram below could be the new long term equilibrium in Country X?
Find the most correct answer.
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