Question: Consider the intertemporal model with investment that we discussed in chapter 11. Suppose government expenditure in the current period falls, but future government expenditure remains

Consider the intertemporal model with investment that we discussed in chapter 11. Suppose government expenditure in the current period falls, but future government expenditure remains unchanged. What happens to (current period) wage, employment, interest rate, output, investment, and consumption? Draw graphs and explain the intuition behind each step.

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