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Could you please help solve the below question: Question-8 Assume a two-period model where national income is 100 in the current period and 120 in

Could you please help solve the below question:

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Question-8 Assume a two-period model where national income is 100 in the current period and 120 in the future period. The world real interest rate is assumed to be 1 0% per period. The representative consumer always wishes to set current consumption plus government spending equal to future consumption plus government spending [C+G=C'+G'), which implies perfect complements preferences. a) Determine consumption plus government spending in the current and future periods, and also the current account surplus. Draw a diagram to illustrate your results. (5 Points). b) Now, suppose that the world real interest rate increases to 20% per period. Again, determine consumption plus government spending in the current and future periods and also the current account surplus, and show these in your diagram. (5 Points)

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