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The Keynesian LRAS Curve is composed of three phases. The LRAS Curve is horizontal in the first phase. What does this mean?

A. An increase in Aggregate Demand causes a decrease in the Aggregate Price Level.
B. An increase in Aggregate Demand does not cause a change in the Aggregate Price Level.
C. An increase in Aggregate Demand causes an increase in the Aggregate Price Level.

Answer :

shty405
B. An increase in Aggregate Demand does not cause a change in the Aggregate Price Level.

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