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Answer to Question #231157 in Macroeconomics for Tiyoo

Question #231157

with the help of an IS-LM diagram show the effect of restrictive monetary policy on output under flexible exchange rates and with perfect capital mobility


1
Expert's answer
2021-08-30T14:36:47-0400

Restrictive monetary policy will shift LM curve to the left, as a result the equilibrium interest rate will increase, and the output will decrease.


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