Question: Question 2/4 [25 pts] Consider the Monetary Intertemporal Model, suppose that the money supply is fixed for all time. Assume the government made a

Question 2/4 [25 pts] Consider the Monetary Intertemporal Model, suppose that the

Question 2/4 [25 pts] Consider the Monetary Intertemporal Model, suppose that the money supply is fixed for all time. Assume the government made a public announcement regarding a decrease in future government spending G'. Assume all agents have perfect information. 1. How will you expect the Ns (r), Nd, Ys, and Yd curves to shift? Give the driver of each shift and illustrate your results using some appropriate graphs. [15 pts] 2. What are the final effects on the current equilibrium output, the employment, the real wage, the real interest rate, and the price level. Explain your results. [10 pts]

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