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Find economy with a recessionary gap

Assignment Help Macroeconomics
Reference no: EM132655557

1. Suppose the government increases purchases in an economy with a recessionary gap. How would this policy affect bond prices, interest rates, investment, net exports, real GDP, and the price level? Show your results graphically.

2. Suppose the government cuts transfer payments in an economy with an inflationary gap. How would this policy affect bond prices, interest rates, investment, the exchange rate, net exports, real GDP, and the price level? Show your results graphically.

3. Suppose that at the same time the government undertakes expansionary fiscal policy, such as a cut in taxes, the Fed undertakes contractionary monetary policy. How would this policy affect bond prices, interest rates, investment, net exports, real GDP, and the price level? Show your results graphically.

Reference no: EM132655557

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