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1. What happens to U.S. real GDP and the price level in the short run, when...

1. What happens to U.S. real GDP and the price level in the short run, when a major trading partner enters a recession (i.e. experience a decrease in their income)? Assume that initially the U.S. economy is at its long-run equilibrium.

2. Suppose an economy is initially at its long-run equilibrium and short run aggregate supply decreases. How do price level and real GDP change in the short run?

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