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Define and analyze crowding out and degree crowding out

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1. To end a Great Recession a small open economy with flexible exchange rates wants to permanently increase real GDP. Should it use fiscal or monetary policy (i.e. increase government spending or expand the nominal money supply) to accomplish its goals? Explain with graphs and you should mention capital (inflow/outflow),demand change, exchange rate change if flexible and final shift.

2. Define and Analyze crowding out and degree crowding out. Explain with diagram when there is a completed crowding out or no crowding out.

Reference no: EM132405672

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