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Figure 6 c. When the economy makes the transition from its shortrun equilibrium to its longrun equilibrium, shortrun aggregate supply will decline, causing the price level to rise even further (point C). d. The increase in the price level will cause an increase in the demand for money, raising the equilibrium interest rate. e.
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Dec 28, 2015· The aggregate price level refers to a measure of the level of all prices, typically expressed relative to some point in the past like the Consumer Price Index or Producer Price Index. A market price generally refers to the price of a particular...