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Consumption expenditures C = 300 + 0.3Yd Investment expenditures I = 200 + 0.2Y-3000i Government expenditures G = 370 and taxes t = 200 Currency

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Consumption expenditures C = 300 + 0.3Yd Investment expenditures I = 200 + 0.2Y-3000i Government expenditures G = 370 and taxes t = 200 Currency requirements (M/P) d = 2Y-8000i and Currency supply (M/P) s = 2000 a. Define the IS and LM communication equations. Find a short-term balance of product levels and interest rates. b. Now let's say the government decides to reduce the budget deficit, especially to reduce government spending to G = 350 and taxes T = 300. Calculate the new short-term equity of product levels and interest rates. c. By using practical policies in question b. Where G = 350 and T = 300 Suppose the central bank decides to set a target interest rate of 10%

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