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05) Assume that prices and wages adjust rapidly so that the markets for labor, goods, and assets are always in equilibrium. What are the effects

05) Assume that prices and wages adjust rapidly so that the markets for labor, goods, and assets are always in equilibrium. What are the effects of each of the following on output, the expected real interest rate, and the current price level?

(a) a temporary increase in taxes

(b) a reduction in the effective tax rate on capital

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