How does this policy mix differ from clinton-green- span mix

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The Bush-Greenspan policy mix

In 2001, the Fed pursued a very expansionary monetary policy. At the same time, President George W. Bush pushed through legislation that lowered income taxes.

a. Illustrate the effect of such a policy mix on output.

b. How does this policy mix differ from the Clinton-Green- span mix?

c. What happened to output in 2001? How do you reconcile the fact that both fiscal and monetary policies were expan- sionary with the fact that growth was so low in 2002? (Hint: What else happened?)

Reference no: EM13901403

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