An economy is in a medium-run equilibrium where output is stable and inflation is zero. Suddenly, the government launches a large-scale infrastructure spending program. Assuming no immediate policy response from the central bank, which of the following best describes the chain of events that will unfold?
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An economy is in a medium-run equilibrium where output is stable and inflation is zero. Suddenly, the government launches a large-scale infrastructure spending program. Assuming no immediate policy response from the central bank, which of the following best describes the chain of events that will unfold?
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