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Suppose the economy begins

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Reference no: EM131191882

Spending shocks and the medium run

Suppose the economy begins with output equal to its natural level

Using the AS-AD model developed in this chapter

Where it uses an interest rate rule with a price level target show the effects of reduction in income taxes on the position of the AD, AS, IS AND LM curves in the medium run.

Reference no: EM131191882

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