What will be the effect of a reduction in the central banks, Econometrics

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What will be the effect of a reduction in the central banks

Suppose, in the sticky price model, that there is deficient financial liquidity, as we studied in Chapter 13, and that there is a positive output gap. What will be the effect of a reduction in the central bank's target interest rate? Construct a diagram and explain your results. What would the appropriate monetary policy be?

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Econometrics: What will be the effect of a reduction in the central banks

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