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The section titled Policymakers Must Use Fiscal Stimulus in a Recession points to empirical evidence indicating that in recessions discretionary fiscal policy can be effective
The section titled "Policymakers Must Use Fiscal Stimulus in a Recession" points to empirical
evidence indicating that in recessions discretionary fiscal policy can be effective at stimulating
aggregate demand if the interest rate is low and the central bank does not counter the fiscal expansion
by monetary tightening. Why is fiscal policy more effective in such a situation compared to other
conditions? Please use the IS-LM framework to explain your answer.
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