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Solve it pleasee Using two-period real inter-temporal model we studied in chapter 11, answer the following questions: a Analyze the effects of a decrease in

Solve it pleasee

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Using two-period real inter-temporal model we studied in chapter 11, answer the following questions: a Analyze the effects of a decrease in current productivity 2 on equilibrium prices (wages and interest rates) and quantities (output, consumption, employment and investment). Use ap- propriate graphs to illustrate. b Now, suppose that the decrease in productivity also effects the tax collection efciency of the government. Therefore, for the same amount of spending, the government needs to collect a higher amount of taxes. Given this additional effect, revisit your results in part (a), analyze the additional changes in equilibrium prices and quantities. Use appropriate graphs to illustrate

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