Explain the importance of the real balance, interest rate, and international trade effects.

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For each of the following events ,explain the short-run and long-run effects on output and the price level , assuming policymakers take no action. aThe stock market declines sharply, reducing consumers’ wealth bA technological improvement raises productivity cThe federal government increases spending on national defense dA recession overseas causes foreigners to buy fewer U.S. goods

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Chapter 9, Problem 13QP

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Explain the importance of the real balance, interest rate, and international trade effects.

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