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Unformatted text preview: Presidents Speech- plan to reduce deficit = expand economy, not increase taxes or reduce Govt spending We assume that the Fed fixes the money supply. Money Demand= Money Supply Md/p= hY-xr As income rises, interest rate rises. LM= Liquidity of Money Together: http://www.staff.ncl.ac.uk/david.harvey/AEF116/2.4/2.4.html A good site for the chapter material Effects of Different Policies Since the Federal Reserve is independent, it can oppose the president and congress if it thinks its best....
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- Spring '07