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Consider an economy that is part of a common currency area. This economy experiences a large permanent country specific aggregate demand shock. a) how does
Consider an economy that is part of a common currency area. This economy experiences a large permanent country specific aggregate demand shock.
a) how does the economy recover without the use of fiscal policy, through the real interest and real exchange rate channels?
b) is it better to use fiscal policy or allow the economy to recover without intervention?
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