Use the Classical (RBC)IS-LM-FE Model to Show the Effects on the Economy

question 37

Essay

Use the classical (RBC)IS-LM-FE model to show the effects on the economy of a temporary decrease in government spending.You should show the impact on the real wage,employment output,the real interest rate,consumption,investment,and the price level.

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Definitions:

Note Payable

A written promise to pay a specified amount of money, usually with interest, at a future date.

Accrued Interest

Accrued Interest is the interest that has accumulated on a debt or investment over a specific period but has not yet been paid.

Journal Entry

A record in accounting that logs every financial transaction of a business in double-entry bookkeeping.

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, typically presented as a line item on the income statement.