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Compare the newlong-runequilibrium with the old equilibrium and create a table like bellow, fill in the table by writing higher, lower, or unchanged in each

  1. Compare the newlong-runequilibrium with the old equilibrium and create a table like bellow, fill in the table by writing higher, lower, or unchanged in each cell and explain why (e.g. if you think the Unemployment rate is higher in the new equilibrium, write 'higher' in the first cell) (15 marks)

Unemployment

rate

Real wage Output

New

equilibrium following the policy change

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