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Impact on equilibrium income and the interest rate

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What will be the impact on the equilibrium income and the interest rate if the federal reserve expands the money supply and the federal government has an expansionary fiscal policy?

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Solution Preview

What will be the impact on the equilibrium income and the interest rate if the Fed expands the money supply and the federal government has an expansionary fiscal policy?

The above issue is related to the Monetary policy. "Monetary Policy involves changes in the base rate of interest to influence the rate of ...

Solution Summary

This solution discusses the impact that the expansionary monetary policy has on equilibrium income and the interest rate. Furthermore, it explains what an expansionary fiscal policy involves and the mechanisms for achieving it's goals.

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