In a closed economy, if the money stock is held constant by the central bank, an increase

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“In a closed economy, if the money stock is held constant by the central bank, an increase in the government deficit does not have either short-run or long-run effects on aggregate demand and output.” Discuss in the context of the neoclassical model and the new classical model (with rational expectations and Ricardian equivalence).

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Monetary Economics

ISBN: 9780415772099

2nd Edition

Authors: Jagdish Handa

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