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The Keynesian Model of the macroeconomy argues that prices are sticky due to labor contracts and unions.
Part 2
a. The existence of sticky prices causes the---to be horizontal.
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b. Suppose that the aggregate demand changes due to an decrease
in the amount of money in circulation. The cure shift where.
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Short-run aggregate supply curve.
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The decrease in the amount of money in circulation would cause a leftward shift in the aggregate demand curve. This is because with less money in circulation, people and businesses would have less purchasing power, leading to a decrease in overall demand for goods and services.