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In class, we say that the monetary policy multiplier is same as fiscal policy multiplier (1/1-MPC). But in reality the monetary multiplier is likely smaller
In class, we say that the monetary policy multiplier is same as fiscal policy multiplier (1/1-MPC). But in reality the monetary multiplier is likely smaller (less effect on GDP from monetary policy). What are possible reasons why the monetary policy has a smaller multiplier? (include money demand curve in reasoning).
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