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If the economy is facing a steep recession caused by a drop in consumer spending and the output gap by which we are below potential
If the economy is facing a steep recession caused by a drop in consumer spending and the output gap by which we are below potential GDP is $ bn which among the following is an appropriate policy response?
lower interest rates and cut taxes
raise interest rates and cut taxes
lower interest rates and decrease government spending
raise interest rates and increase government spending
none of the answers listed is appropriate
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