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In 2017, the United States is overheating. The following measures are implemented: a. The FED cuts...

In 2017, the United States is overheating. The following measures are implemented:

a. The FED cuts the money supply. Illustrate with an AD/AS graph the effect of this measure on the economy. Indicate the change in real GDP, the price level and unemployment rate.

b. In addition to the decrease in money, the federal government increases government spending. Illustrate the effect of these measures on the economy. Indicate the change in real GDP, the price level and unemployment rate.

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