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2.Suppose the government reduces the level of government purchases and the level of taxes equally, G↓ = T↓. Explain in detail, using words/symbols, what will

2.Suppose the government reduces the level of government purchases and the level of taxes equally, G↓ = T↓. Explain in detail, using words/symbols, what will happen to: the real interest rate, private and public savings, national savings, investments, and consumption. Show graphically the effects on the savings and investment market. Assume the MPC < 1.

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