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C show how the short run effect of an increase in m

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Unformatted text preview: wer. (c) Show how the short-run effect of an increase in M depends on the parameter b2 using your equation and a diagram. Explain why an increase in M has a larger effect on output if b2 is larger. 5. Problem 3, Chapter 6 of Blanchard, p. 131. 6. Problem 8, Chapter 6 of Blanchard, p. 132....
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