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As a member of the Eurozone, Greece was/is unable to conduct it’s own monetary policy. Instead,...

As a member of the Eurozone, Greece was/is unable to conduct it’s own monetary policy. Instead, Eurozone monetary policy is set by the European Central Bank in Frankfurt. Suppose that Greece is facing a recession and wants to boost output.
1. What type of government policy would you suggest to boost output? Provide an IS-LM graph with a clear explanation of what you are suggesting.
2. How would the government fund such a policy?
3. What are some of the longer term implications of Greece using this approach to stabilizing output?

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Expert Solution

Rahul Sunny answered 7 months ago
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