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5. Can the government and the central bank work together to prevent crowding out effect? Use...

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Economics

5. Can the government and the central bank work together toprevent crowding out effect? Use an IS-LM diagram to explain thesteps. What should be done by the government and the central bank?Explain your answer.

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4.1 Ratings (783 Votes)
Yes crowding out effect can be prevented by simultaneous mix ofexpansionary fiscal policy and expansionary monetary policyHigher government purchase increases budget deficit ceterisparibus so government borrowing increases for deficit    See Answer
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