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An economy is facing the recessionary gap. To eliminate the deficit, should the central bank use expansionary or contractionary monetary policy? How will the interest
An economy is facing the recessionary gap. To eliminate the deficit, should the central bank use expansionary or contractionary monetary policy? How will the interest rate, investment spending, consumer spending, real GDP, and the aggregate price level change as monetary policy closes the recessionary gap? Show the solution in a diagram.
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