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1. Define contractionary and expansionary monetary policies. Discuss when these policies are necessary. 2 Define contractionary and expansionary fiscal policies. Discuss when the government conducts
1. Define contractionary and expansionary monetary policies. Discuss when these policies are necessary.
2 Define contractionary and expansionary fiscal policies. Discuss when the government conducts these policies.
3. Suppose the government increases expenditures by 50 billion dollars while increasing taxes by 50 billion dollars, and mpc = 0.8. Assume that there is no crowing out, or acceleration effects. What is the combined effect of these changes on GDP? In other words, by how much the GDP increase, or decrease?
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