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this is my question 3. (25 points) For each case, show the effect of an increased government spending (G) on output, consumption, employment (hours worked),

this is my question

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3. (25 points) For each case, show the effect of an increased government spending (G) on output, consumption, employment (hours worked), labor productivity, and real wage. For (a) and (b), the government spending does not increase private households' utility or firms' productivity. (a) The government spending is financed by a lump-sum tax. (b) The government spending is financed by labor income tax. That is, the after-tax labor income is (1 - t)w/ where t is the tax rate, w is real wage rate, and N is hours worked. (c) The government spending (which is financed by the labor income tax as in (b) ) is valued by households. More specifically, G is a perfect substitute for private consumption so that the utility is U(C + aG, L) where a = 1, C is private consumption, L is leisure

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