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Wed 1 Jun, 2016 08:36 am
Suppose the government starts with a balanced budget. Then, there is an increase in government spending, but there is no change in taxes. Show in an IS-LM diagram the effect of this policy on output in the short run. How will the government finance the increase in government spending?
@Mygnir,
It's the very first image in the Wikipedia page....
https://en.wikipedia.org/wiki/IS%E2%80%93LM_model
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