Question: Could you please answer it by providing step by step solution and explanation ? I would be very grateful! (Intermediate Macroeconomic) In the real business
Could you please answer it by providing step by step solution and explanation? I would be very grateful! (Intermediate Macroeconomic)

In the real business cycle model, suppose government spending increases temporarily. 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. Could business cycles be explained by uctuations in G? That is, does the model replicate the key business cycle facts when subject to temporary government spending shocks? (5 marks) 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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