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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 and thus aggregate demand should remain depressed for some time. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts1)short-run aggregate supply left.2)aggregate demand right.3)aggregate demand left.4)short-run aggregate supply right.

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