Use the classical is–lmmodel to analyze the effects of a permanent increase in government purchases of 100 per year (in real terms). the increase in purchases is financed by a permanent increase in lump-sum taxes of 100 per year.
a. begin by finding the effects of the fiscal change on the labor market. how does the effect of the permanent increase in government purchases of 100 compare with the effect of a temporary increase in purchases of 100?
b. because the tax increase is permanent, assume that at any constant levels of output and the real interest rate, consumers respond by reducing their consumption each period by the full amount of the tax increase. under this assumption, how does the permanent increase in government purchases affect desired national saving and the iscurve?
c. use the classical is–lmmodel to find the effects of the permanent increase in government purchases and taxes on output, the real interest rate, and the price level in the current period. what happens if consumers reduce their current consumption by less than 100 at every level of output and the real interest rate?

Areview of the ledger of sheridan company at december 31, 2017, produces these data pertaining to the preparation of annual adjusting entries. 1. prepaid insurance $19,661. the company has separate insurance policies on its buildings and its motor vehicles. policy b4564 on the building was purchased on july 1, 2016, for $13,290. the policy has a term of 3 years. policy a2958 on the vehicles was purchased on january 1, 2017, for $8,586. this policy has a term of 18 months. 2. unearned rent revenue $468,720. the company began subleasing office space in its new building on november 1. at december 31, the company had the following rental contracts that are paid in full for the entire term of the lease. term (in months) number of leases date monthly rent nov. 1 8 $5,450 6 dec. 1 6 $8,630 4 3. notes payable $43,200. this balance consists of a note for 6 months at an annual interest rate of 7%, dated october 1. 4. salaries and wages payable $0. there are 9 salaried employees. salaries are paid every friday for the current week. 6 employees receive a salary of $620 each per week, and 3 employees earn $755 each per week. assume december 31 is a wednesday. employees do not work weekends. all employees worked the last 3 days of december. prepare the adjusting entries at december 31,2017.