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The economy is operating below full employment (Y0 > y* )The government wants bring the economy back to full employment but in the process wants to change the composition of demand toward investment and away from consumption without, however, allowing aggregate demand to go beyond full employment. What is the required policy mix? Use an IS-LM diagram to show your policy proposal, clearly label Y0 and Y∗

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  • Category:- Macroeconomics
  • Reference No.:- M92088455
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