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3) (50 pts - 33 pts discussion and 17 pts for graph) Discuss, using a detailed AA/DD graph to illustrate, that under full employment, a
3) (50 pts - 33 pts discussion and 17 pts for graph) Discuss, using a detailed AA/DD graph to illustrate, that under full employment, a temporary fiscal expansion would temporarily increase output (leading to over-employment) and have a temporary impact on the exchange rate. Contrast this temporary fiscal expansion with the impact on output and the exchange rate of a permanent fiscal expansion
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