Answer to Question #283759 in Macroeconomics for ABEX

Question

3. Suppose a country targets an income level of Y ∗.

(a) Demonstrate, using graphs, that either fscal or monetary policies can be used to achieve the targeted level of income.

(b) What are the possible reasons for a country to opt for a particular policy (fscal or monetary) while both of them can yield similar level of income?

Answer 1

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