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Question 4 Suppose that a country's output is below the policy-makers' desired level of output and is experiencing a trade surplus. Assume that the policy

Question 4

Suppose that a country's output is below the policy-makers' desired level of output and is experiencing a trade surplus. Assume that the policy makers' goals are to achieve the desired level of output (i.e., the natural level of output) and balanced trade. Given this information, what type of exchange rate and/or fiscal policy can be used to achieve simultaneously these two goals? Explain.

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