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Assume that four-sector model is at play. C+I+G. All expenditures are autonomous. Given: C = 700 + .80 (1-t)Y TR = 100 t =0.25 L

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Assume that four-sector model is at play. C+I+G. All expenditures are autonomous. Given: C = 700 + .80 (1-t)Y TR = 100 t =0.25 L =0.20Y40i | =21075i MIP =800 G = 1000 Required: 1. Suppose government expenditures decreases to 880, what happens to equilibrium income and interest rates? Show your proof: computation and graph presentation. 2. Assuming that the fourth sector is included with an autonomous net exports of 250, what happens to equilibrium income and interest rate? 3. Given your simulations above, what realizations do you have with respect to the macroeconomv

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