Question: (a) Using an IS/LM diagram briefly explain the likely effects of a fiscal contraction on both the domestic interest rate and the level of economic

(a) Using an IS/LM diagram briefly explain the likely effects of a fiscal contraction on both the domestic interest rate and the level of economic activity. [5 marks]

(b) Using a second IS/LM diagram briefly explain the likely effects of a monetary contraction on both the domestic interest rate and the level of economic activity. [5 marks]

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