Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2.
B. P2 and Y3.
C. P3 and Y1.
D. P2 and Y2.
Answer: B
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What will be an ideal response?
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A. Producers B. Consumers C. Those affected by the externality D. All of these groups are affected when it becomes internalized.
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