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Suppose that the goal of the fiscal authority is to set government spending so as to...

Suppose that the goal of the fiscal authority is to set government spending so as to achieve zero Keynesian unemployment (i.e. unemployment is at the natural rate), while the goal of the monetary authority is to achieve stability of the price level. Now, the economy is hit by a temporary decrease in total factor productivity (negative technological shock). Using an appropriate set of diagrams, show that the goals of the fiscal authority and monetary authority are in conflict. After that suggest a remedy for this conflict, and discuss

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