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Suppose that government spending increases temporarily in the New Keynesian model. Use diagrams and explain your results. a. Determine the equilibrium effects on real output,

Suppose that government spending increases temporarily in the New Keynesian model. Use diagrams and explain your results. a. Determine the equilibrium effects on real output, consumption, investment, the price level, employment and the real wage using graphical analysis. (5 marks) b. Are these effects consistent with key business cycle facts

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