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QUESTION

The economy of a country with a floating exchange rate is slipping into a recession. What fiscal and monetary policies would you recommend?

The economy of a country with a floating exchange rate is slipping into a recession. What fiscal and monetary policies would you recommend? Use well labeled diagrams for the money market, FX market, Keynesian cross, and IS-LM and words to explain what happens to interest rates, aggregate demand and its components (C, I, G, and Xn), output, and the nominal exchange rate in the short run when prices are sticky

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