Short-run and long-run effects of a decrease in the markup

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Reference no: EM13771344

a) Use the IS/LM-AD/AS framework to illustrate the short-run and long-run effects of a decrease in the markup (m?). Assume rational expectations.

b) Explain the role of the interest rate here. That is, why does the interest rate have to fall?

Reference no: EM13771344

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