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Assume that the economy starts at the 'natural rate of output'. Now suppose there is a decline in net exports due to the global economic
Assume that the economy starts at the 'natural rate of output'. Now suppose there is a decline in net exports due to the global economic downturn. Use the AD-AS diagram to show the effects in the short run and the medium run. Explain critically how expansionary fiscal policy may influence these equilibrium positions. Please use diagrams not only text.
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