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You are the chief economic adviser in a small open economy with a floating exchange rate. Your boss, the president of the country, wishes to
You are the chief economic adviser in a small open economy with a floating exchange rate. Your boss, the president of the country, wishes to increase the level of output in the short run in order to win the upcoming election. Do you recommend monetary or fiscal policy? Should the policy be expansionary or contractionary? Explain in detail the reasons for your proposed policy using a Mundell-Flemming model. Do not provide diagrams with the answer.
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