Question: Can you please help me solve this problem? Thanks! Please be as detailed as possible. Suppose the central bank of a closed economy chooses to
Can you please help me solve this problem? Thanks! Please be as detailed as possible.
Suppose the central bank of a closed economy chooses to target its interest rate. Further suppose the economy is in the global financial tsunami with huge amount of unemployed resources and close-to-zero interest rate (e.g., between 0% and 0.25%). Draw the IS curve, the LM curve and the full employment output curve (Yn), and indicate the initial position of the economy in the diagram.
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