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Unformatted text preview: estimates the government spending multiplier to be 1.93 if interest rate is held constant and a multiplier of 0.60 if the money supply is held constant (These multipliers are for the fourth quarter after the policy change is made). If the U.S. government is planning to increase fiscal spending by $300 billion dollars before January 2009, what is the likely effect of this on real GDP under (i) and (ii)?...
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- Fall '08
- IS-LM Model