Short-run model

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Suppose we have the following short-run model. Resource constrain isYt = Ct + It + Gt + EXt − IMtWhere Ytis economy output, Ctis consumption. Itis investment. Gtis government purchase. EXtis exports. IMtis imports. Government purchase depends on the current state of the economy. Forexample, when there is an economic recession, the government will spend […]