Suppose the Federal Reserve is using an interest rate as a target, while real income is the

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Suppose the Federal Reserve is using an interest rate as a target, while real income is the ultimate policy target, and there is an autonomous drop in business investment that the Federal Reserve had not predicted. Use the IS-LM model to show the effects of the shock. Would income have been affected less or more if the Federal Reserve had been using a money supply target?
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Macroeconomics Theories and Policies

ISBN: 978-0132831529

10th edition

Authors: Richard T. Froyen

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