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Board of governors of the federal reserve

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You are the chairperson of the Board of Governors of the Federal Reserve. You believe in a Keynesian model of the economy, and your goal is to keep the economy at the full-employment level of output. How would you respond (tightening or easing policy) in each of the following cases?

(a) Government purchases increase

(b) Corporate tax rates increase

(c) Expected inflation increases

(d) There's a beneficial oil price shock (and the LM curve shifts more to the right than the FE line)

Reference no: EM131079607

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