Hasil (
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[Salinan]Disalin!
Equation (1) represents goods market equilibrium and the equation (2) represents money market equilibrium. Equation (3) also suggests that international capital flows are fast enough to hold domestic interest rate (r) equal to the foreign interest rate (r*) (Romer, 1996).
In this system, T, G (fiscal policy instrument) and M (monetary policy instrument) are exogenous variables. Also, due to the assumption of the Keynesian system, Foreign interest (r*) rate and the price level (p) are fixed.
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