Question
A government recently introduced the Policy mix of
Monetizing Budget deficit to revive the economy. Using the IS-LM framework, the impact on Output and interest rate isSolution
Monetizing Budget deficit means printing money to fund the government expenditure. It means using Policy Mix of expansionary monetary policy with expansionary fiscal policy. So, output will increase but nothing can be said about the interest rate. 
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I.According to Reserve Bank of Ind...
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