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Consider a business cycle theory that combines the classical âIS-LM model with the assumption that temporary changes in government purchases are the main source of cyclical fluctuations. According to thisâ theory, what happens after a temporary increase in government purchases to each of the followingâ variables?
a. Employment
b. The real wage
c. Average labor productivity
d. Investment
e. The price level
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Consider a business cycle theory that combines the classical âIS-LM model with the assumption that t...
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