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Both the Aggregate demand and Aggregate supply curve will shift.
When prices fall the demand of that particular commodity would increase and will therefore shift to the right. This shows rise in demand .Many consumers would rush to the market to purchase the commodity while the prices are still low.
When prices fall, producers would slow down in supplying their commodities because they will make huge losses. The fall of prices would reduce the supply. The supply curve would shift to the left.
Generally : Fall of prices reduces supply but on the other side it increases demand from consumers
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Sep 17th, 2015
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