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Question 3: Fiscal policy in the lS-LM-PC model a. Set up an IS-LM-PC graph for an economy at potential output and inationary expectations are adaptive. b. Now assume there is a decrease in government spending in period 1'. Show the effect of this decrease in G on your graph in (a). [Clearly label which part of your graph refers to (b)]. c. In period t+2 the central bank reacts Show the central bank's policy response on your graph, and explain. [Again, be sure to clearly label what part of your answer refers to part (0)]