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Monetary policy and decrease government expenditures

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Reference no: EM131079622

Suppose the government decided to tighten monetary policy and decrease government expenditures. In the short run in the Keynesian model, the effect of these policies would be to _____ the real interest rate and _____ the level of output.

(a) lower; decrease

(b) lower; have an ambiguous effect on

(c) have an ambiguous effect on; decrease

(d) raise; decrease

Reference no: EM131079622

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