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Liquidity Preference: In the short run and assuming fixed prices, discuss the effectiveness of expansionary fiscal policy and expansionary monetary policy in increasing output when

  1. Liquidity Preference: In the short run and assuming fixed prices, discuss the effectiveness of expansionary fiscal policy and expansionary monetary policy in increasing output when the parameter governing the size of transaction demand for money, Ly, is small. Use all appropriate mathematics, graphs, and economic reasoning in your answer.

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