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Suppose the government increases tax to reduce its budget deficit. - How does the tax increase affect the lS-LM diagram? - What is the appropriate
Suppose the government increases tax to reduce its budget deficit. - How does the tax increase affect the lS-LM diagram? - What is the appropriate policy for the Central Bank to maintain the original level of output? - What happens if the nominal interest rate is already at 0%? Explain. f\
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