Suppose that the government decides to decrease transfer payments while simultaneously increasing government spending in such a

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Suppose that the government decides to decrease transfer payments while simultaneously increasing government spending in such a way that total government expenditures are unchanged. Use the Income-Expenditure model to analyze the effects of such a policy on the equilibrium output. Explain your answers. [12 points] Use the IS-LM and AD-AS diagrams to analyze the effects of the following events on equilibrium (i) output, (ii) interest rates, and (iii) prices, assuming that all curves have normal shapes