Suppose that the government increases taxes and government purchases by equal amounts. What happens to the interest rate and investment in response to this balanc budget change? Does your answer depend on the marginal propensity to consume? (
Suppose that the government increases taxes and government purchases by equal amounts. What happens to the interest rate and investment in response to this balanc budget change? Does your answer depend on the marginal propensity to consume? (
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section: Chapter Questions
Problem 7TY
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