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would the spending multiplier be higher when the monetary policy is more expansionary? (b) Now, suppose that the central bank wants to maintain the equilibrium

would the spending multiplier be higher when the monetary policy is more expansionary?

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(b) Now, suppose that the central bank wants to maintain the equilibrium interest rate at the previous level. Given the same increase in G , what will be the new equilibriuin output Y? Show your result on the IS-LM diagram and compare the results from that in (a). Do you see that the spending multiplier can be higher when the monetary policy is more accommodative (expansionary)

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