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3. In the New Keynesian model how should the central bank change its target interest rate in response to each of the following shocks? Use

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3. In the New Keynesian model how should the central bank change its target interest rate in response to each of the following shocks? Use diagrams and explain your results. a. There is an increase in money demand. (5 marks) b. Total factor productivity is expected to decrease in the future

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