Assume that an open economy with trade and budget deficits (NX ...

 

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Assume that an open economy with trade and budget deficits (NX<0, B < 0) and faces a recession (Y<Y). To overstep the twin gaps and to increase the output to the natural level, what should be done? (15) Assume that an open economy with trade and budget deficits (NX<0, B < 0) and faces a recession (Y<Y). To overstep the twin gaps and to increase the output to the natural level, what should be done? (15)

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An open economy with twin deficits and a recession can take the following steps to overcome these problems and increase output to the natural level Re... View the full answer