Which specific monetary and fiscal policies would be require

Reference no: EM13235079

In 2005 the US was close to full employment, but many observers and economists were worried about its trade deficit, which was over $700 billion per year. Suppose macroeconomic policymakers wanted to maintain the level of real GDP in the short run but change the real exchange rate to reduce the trade deficit. Assuming that the US is a large open economy, state which specific monetary and/or fiscal policies would be required to achieve these objectives in the short run?

Reference no: EM13235079

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