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Posted on Jul 08, 2024

Consider the IS-LM framework. If the central bank decreases the price target and government spending increases, then we know that in the short run: A.

Consider the IS-LM framework. If the central bank decreases the price target and government spending increases, then we know that in the short run:

A. output rises; interest rate decreases

B. interest rate rises; effect on output is ambiguous

C. output rises; effect on interest rates is ambiguous

D. interest rate rises; output decreases

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