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In the coordination failure model, suppose the government announces a decrease in futureG0. Using the graphs, determine the effects of this change on the aggregate

In the coordination failure model, suppose the government announces a decrease in futureG0.

  1. Using the graphs, determine the effects of this change on the aggregate output and the real interest in the good equilibrium and in the bad equilibrium, and explain your results.
  2. Is the investment less volatile or more volatile with this policy?

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