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7. Using the IS-LM model, consider a situation where the government increases taxes and spending by the same amount. a. Describe the change in real
7. Using the IS-LM model, consider a situation where the government increases taxes and spending by the same amount. a. Describe the change in real and nominal income, using a diagram where appropriate. [2 points] b. Describe the change in the nominal and real interest rate, using the diagram in part (a) if relevant.
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