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Business, 05.06.2020 03:00 Imagine2013

Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time. Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts:

a) short-run aggregate supply right.

b) aggregate demand right.

c) aggregate demand left.

d) short-run aggregate supply left.

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