Problem 1: Use our general equilibrium illustration (with the diagrams for output, labor market, funds market, and assets market) to determine the effects of each of the following on the general equilibrium values of real wage, employment, output, real interest rate, consumption, investment, and price level. Assume that the economy adjusts immediately from long-run to long-run and that the economy is a closed economy (potentially a real interest rate effect in the funds market). In the long-run equilibrium, all markets clear, GDP follows the production approach, and prices and nominal wages are exible. Note: Remember that in the long run the price level adjusts and the real interest rate in the assets market follows from the real interest rate in the funds market (determined by the \"real sectors\" of goods, labor and funds). a) The expected rate of ination, are, rises. b) A temporary decrease in government purchases, G. c) A permanent reduction in the effective tax rate on capital, ta