1. Use the IS-LM analysis to explain the following: a) The government institutes significant cuts in...

1. Use the IS-LM analysis to explain the following:

a) The government institutes significant cuts in public expenditure.

b) The Central bank institutes an asset purchasing facility which expands money supply.

c) The central bank fears that inflationary pressures are rising and increases interest rates.

d) The government increases taxation to try and reduce a large budget deficit.

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Expert Solution

Rahul Sunny answered 1 year ago

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