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The 3-Eguation Model and Macroeconomic Polig 1. (a) Explain the central bank's preference. (b) Define the central bank's constraints. (c) Derive the Monetary rule (MR)

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The 3-Eguation Model and Macroeconomic Polig 1. (a) Explain the central bank's preference. (b) Define the central bank's constraints. (c) Derive the Monetary rule (MR) graphically. 2. (a) Using the 3-equation model, explain the path to equilibrium when there is a negative permanent aggregate demand shock

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