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1.Use the Theory of Liquidity Preference to explain the short-run effects of an increase in government spending. (a)(1 point) What happens to the nominal interest

1.Use the Theory of Liquidity Preference to explain the short-run effects of an increase in government spending.

(a)(1 point) What happens to the nominal interest rate in equilibrium?

(b)(1 point) In which direction will this push the aggregate demand curve?

(c)(1 point) What is the term that describes this effect on aggregate demand?

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