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Question Two (16 marks) Fiscal policy and monetary policy often change at the same time 1. Suppose the government wants to increase investment but keep
Question Two (16 marks) Fiscal policy and monetary policy often change at the same time 1. Suppose the government wants to increase investment but keep output unchanged. In the IS-LM model, what mix of monetary and fiscal policy will achieve this goal? 2. In early 1980s, the Canadian government ran a budget deficit while the Bank of Canada pursued a tight monetary policy. What effect should this policy mix have
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