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In the context of the IS LM model Suppose an economy in which economic authorities they carry out a contractive fiscal policy

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In the context of the IS LM model Suppose an economy in which economic authorities they carry out a contractive fiscal policy. Given this policy, the following is observed: • A decline in GDP. A decrease in investment. What can explain the behavior of these variables? Faced with the contractionary fiscal policy, the central bank simultaneously bought bonds in open market. The central bank does not have an interest rate target.. @ Every options. The economy is in the liquidity trap. Continuar traducción