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Write down the national income identity. Assume again that output return to its natural level in the medium run. If NX increases to zero, what
Write down the national income identity. Assume again that output return to its natural level in the medium run. If NX increases to zero, what must happen to domestic demand in the medium run? What government policies are available to reduce domestic demand in the medium run? Identify which components of domestic demand each of these policies affect
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