Get the maximum benefit from the expansionary policy

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In a long run aggregate supply and demand context where the economy starts with an output gap of $500 billion, the reserve ratio is .1, and the Federal reserve buys $50 billion in bonds, show the effect of this monetary policy. Assume banks loan out all money, the economy is not at the zero lower bound, and all loans are consumed in this period (IE we get the maximum benefit from the expansionary policy)

Reference no: EM131112369

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