Question: A permanent increase in government purchases has a larger effect than a temporary increase of the same amount. Use the saving-investment diagram to evaluate this

"A permanent increase in government purchases has a larger effect than a temporary increase of the same amount." Use the saving-investment diagram to evaluate this statement, focusing on effects on consumption, investment, and the real interest rate for a fixed level of output. (The permanent increase in government purchases implies larger increases in current and future taxes.)

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