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1. Assuming an economy is operating in a recession, discuss the benefits and costs of fiscal...

1. Assuming an economy is operating in a recession, discuss the benefits and costs of fiscal policy, monetary policy, and a do-nothing approach assuming flexible exchange rates and mobile capital.

2. Again, assuming an economy is operating in a recession and the government wants to conduct an expansionary policy, but does not want to change interest rates or incur any more fiscal debt, discuss what policies are available to the government?

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