ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Consider an economy with initial output lower than the natural level of output (Y") and negative inflation rate (deflation).
a) Now by using the IS-LM-PC model show graphically and describe the deflation spiral and the dynamics of output, inflation and the real interest rate.
b) Discuss the constraint of the central bank and
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