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Consider an economy with: Y* = 15,000 G = 4300 NT = 0.2Y a) Calculate the...

Consider an economy with:

Y* = 15,000

G = 4300

NT = 0.2Y

a) Calculate the budget balance.

b) Draw a budget balance graph showing the G and NT function, and demonstrate where Y* lands on your graph. Label the intercept and slope of your functions.

c) On your graph from (b), demonstrate the change that would occur if government adjusted its expenditures to fight against an inflationary gap.

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