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Suppose the desired full employment equilibrium for a hypothetical country is 40 trillions but the economy is currently in the equilibrium at 20trillion and the

Suppose the desired full employment equilibrium for a hypothetical country is 40

trillions but the economy is currently in the equilibrium at 20trillion and the

requiredreserve ratio is 0.5, what must the central bank (CB) of this country do?

Will the CBcarry out similar or different policy objective if the equilibrium

changed to60 trillion? Explain your answer.

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