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The country in this question adopts a fixed exchange rate and the fixed exchange rate is maintained through changes in fiscal policy. Currently, the country's
The country in this question adopts a fixed exchange rate and the fixed exchange rate is maintained through changes in fiscal policy. Currently, the country's output is above full employment. Can the central bank of that country use monetary policy to bring the economy back to full-employment in the short run? Explain and support your argument in a DD-AA diagram.
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