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S E35: Connecting Interest Rates & Output
Think Like An Economist
How the Real Interest Rate Impacts Output
We've been focusing on monetary policy and setting interest rates. But the truth is there's only so much a central bank can do to fight recessions, particularly when interest rates are already low. The government can change its spending policies or its tax policies to really get things moving. When the government spends more, then we have more output.
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