percent for the last ten quarters, then for IS curve I, real
GDP equals 8,800 − 25(4) − 25(4) − 25(4) − 25(4) − 20(4) − 20(4) − 20(4) − 15(4) − 15(4) −
10(4) = 8,000. For IS curve II, real GDP equals 8,400 − 5(4) − 5(4) − 5(4) − 5(4) − 10(4) −
15(4) − 15(4) − 15(4) − 20(4) = 8,000.
(b) For IS curve I, real GDP in the first quarter equals 8,800 − 25(3) − 25(4) − 25(4) − 25(4) −
20(4) − 20(4) − 20(4) − 15(4) − 15(4) − 10(4) = 8,025. Using the same IS curve, it is easy to
show that for quarters two through…

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