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c. The economy is teetering on the edge of a double-dip recession. Everyone agrees that we will experience a 2% deation next year. Therefore, they're
c. The economy is teetering on the edge of a \"double-dip recession\". Everyone agrees that we will experience a 2% deation next year. Therefore, they're willing to accept two percentage points LESS in nominal interest payments in order to supply a given quantity of funds. For the same reason, demanders of funds require nominal payments to be 2 percentage points lower in order to be willing to borrow a given quantity of funds. Suppose the values of G, T, TR, 1M, and EX are those given in the initial setup. i. Calculate the new level of investment and interest rate, ii. graph the resulting shifts and the movement from old to new equilibrium, and iii. explain how your graph is related to the concept of the \"Fisher effect\"l discussed in Chapter 10 of the textbook. What is the Fisher effect, and how does this graph illustrate the argument
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