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Use the IS-LM model to determine the effects of each of the following on the general equilibrium values of the real wage, employment, output, real interest rate, consumption, investment, and price level.
a) A reduction in the effective tax rate on capital increases desired investment.
b) The expected rate of inflation rises
Describe how this change affects output both immediately and over time. Is the steady state effect on output larger or smaller than the immediate effect?
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Someone claims that the "bargaining" hypothesis appeared in the literature because of a significant flaw in the "comparative advantage" hypothesis. After you briefly explain what these two hypotheses stand for, identify what..
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Briefly discuss whether this problem provides enough information to determine whether the equilibrium price and quantity of trucks increased or decreased.
all other factors held constant what would be the effect on the demand for money m1 of each of the following
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