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If the market power of firms increases, what happens in the AD/AS model? Aggregate demand shifts...

Question

If the market power of firms increases, what happens in the AD/AS model? Aggregate demand shifts...

If the market power of firms increases, what happens in the AD/AS model? Aggregate demand shifts to the right. Aggregate supp
If the market power of firms increases, what happens in the AD/AS model? Aggregate demand shifts to the right. Aggregate supply shifts to the right. Aggregate supply shifts to the left. Aggregate demand shifts to the left.

Answers

Correct option is (3).

The higher the market power, the lower the output produced by each firm. Therefore, aggregate supply decreases, shifting SRAS curve leftward.


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