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1.How would your prediction differ in Problem 13 if the new Keynesian model provides a more accurate description of the economy? What if the traditional model provides the most realistic description of the economy? 2. If, in a surprise victory, a new administration is elected
to office that the public believes will pursue inflationary policy, predict what might happen to the level of output and inflation even before the new administration comes into power. Would your prediction differ depending on which of the three models—traditional, new classical, and new Keynesian—you believed in?
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