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Using the DD-AA model, explain what happens to output and the value of domestic currency in the short run and in the long run, when
Using the DD-AA model, explain what happens to output and the value of domestic currency in the short run and in the long run, when there is a temporary increase in government spending. Label the short-run equilibrium with SR and the long-run equilibrium with LR. In order to receive full credit, you must explain clearly what causes the curves to shift.
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