Suppose you are in charge of deciding the appropriate fiscal policy for an economy in which real

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Suppose you are in charge of deciding the appropriate fiscal policy for an economy in which real GDP is less than potential GDP. One of your economic advisers recommends a reduction in government spending. Using an AD-IA diagram, indicate the short-run, medium-run, and long-run effects of this plan. Did you receive good advice from your economic adviser?

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Principles Of Macroeconomics

ISBN: 9781453334980

9th Edition

Authors: John B. Taylor, Akila Weerapana

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