Monetary policy and fiscal policy often change at same time

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Monetary policy and fiscal policy often change at the same time.

a. Suppose that the government wants to raise investment but keep output constant. In the IS–LM model, what mix of monetary and fiscal policy will achieve this goal?

b. In the early 1980s, the U.S. government cut taxes and ran a budget deficit while the Fed pursued a tight monetary policy.

Reference no: EM131094952

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