Question: Question 2 [20 pts] Using the Real Intertemporal Model seen in class, suppose the government announces an increase in future government spending G'. 1. How

Question 2 [20 pts] Using the Real Intertemporal Model seen in class, suppose the government announces an increase in future government spending G'. 1. How will you expect the increase in G to affect the NS, Nd, Y, and Y curves? Give the driver of each shift. [ 05 pts] 2. Assuming that the change in Y'd is in absolute value more important than the change in Y', what are the equilibrium effects on Y"* and y*? [05 pts] 3. Taking into account the final adjustment in the labour market, do you think the equilibrium employment will increase or decrease? [05 pts] 4. What are the equilibrium effects on consumption and Investment (* and /*? [05 pts]

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