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For this question assume that the real money demand function is L(R, Y) = kY - hR where k > 0 represents the sensitivity of
For this question assume that the real money demand function is L(R, Y) = kY - hR where k > 0 represents the sensitivity of the money demand to income and h > 0 represents the sensitivity of the money demand to the interest rate. Suppose that the economy of Highland has high k and low h, while the economy of Lowland has low k and high h. If the two countries are the same other than the above difference, compare and contrast the short run effectiveness of the fiscal policy in Highland and Lowland.
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