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Problems
Problem 2.1:
What is the link between monetary policy and real variables?
[Solution]
Problem 2.2:
How does each of the variables in the output equation react to the a rise in the
interest rate?
[Solution]
Problem 2.3:
What is the effect of expansionary monetary policy on the interest rate?
[Solution]
Problem 2.4:
What is the effect of expansionary fiscal policy on the interest rate?
[Solution]
Problem 2.5:
What is meant by the term "crowding out"?
[Solution]
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