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Question 4 (12 points). Use the IS-[M model to graphically analyze the following cases. Suppose two identical countries, Alpha and Beta, can be described by

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Question 4 (12 points). Use the IS-[M model to graphically analyze the following cases. Suppose two identical countries, Alpha and Beta, can be described by the ISLl model in the short run. The governments of both countries increase spending by the same amount. The Central Bank of Alpha follows a policy of holding a constant money supply. The Central Bank of Beta follows a policy of holding a constant interest rate. Use the IS- LM model to illustrate graphically and explain the policy impact of the expenditure increase on income and interest rates in the two countries

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