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1. Consider the following IS-LM model that incorporates an accelerator effect. Y = C[Y] + I[ i, Y ] + G M = L[i ,

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1. Consider the following IS-LM model that incorporates an accelerator effect. Y = C[Y] + I[ i, Y ] + G M = L[i , Y] a) Derive dY/dG and show that its sign is ambiguous. b) Appeal to the correspondence principle assuming that the money market continuously and instantaneously clears. Sign the dY/dG multiplier

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