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2. The federal government decides to increase income taxes. (13pts) 1) What would happen to the interest rate? Use a model to explain your answer.(5pts)

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2. The federal government decides to increase income taxes. (13pts) 1) What would happen to the interest rate? Use a model to explain your answer.(5pts) 2) What kind of fiscal policy does the federal government use here? Explain. (2pts) 3) What would happen to GDP and inflation? Use a model to explain your answer.(6pts)

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