Assume the economy starts at a long-run equilibrium

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For each of the following shocks, describe how monetary policymakers would respond (if at all) to stabilize economic activity. Assume the economy starts at a long-run equilibrium.

A. Consumers reduce autonomous consumption.

B. Financial frictions decrease.

C. Government spending increases.

D. Taxes increase.

E. The domestic currency appreciates.

Reference no: EM13982252

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