Suppose you know the following probabilities that describe the reliability of a macroeconomic forecasting firms past performance:

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Suppose you know the following probabilities that describe the reliability of a macroeconomic forecasting firm’s past performance:

The probability of a positive forecast given a good macroeconomy is 0.60.

The probability of a negative forecast given a good macroeconomy is 0.40.

The probability of a positive forecast given a bad macroeconomy is 0.25.

The probability of a negative forecast given a bad macroeconomy is 0.75.

Suppose your prior probability of a good macroeconomy is 0.10. Find the probability of a good macroeconomy given that the forecast is for a good macroeconomy and the probability of a bad macroeconomy given that the forecast is for a bad macroeconomy.

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