(d) Redo part (c) but now assume that the government adjusts T to balance the budget....
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(d) Redo part (c) but now assume that the government adjusts T₁ to balance the budget. Assume that the economy is on the upward sloping part of the Laffer curve. Explain the intuition. (e) Assume that an anti-government party wins the elections and achieves control over macroeconomic policy. Assume that the new government cuts the num- ber of civil servants and uses the cost savings to reduce the marginal tax rate on labour. Show what happens to the economy in the short run. (d) Redo part (c) but now assume that the government adjusts T₁ to balance the budget. Assume that the economy is on the upward sloping part of the Laffer curve. Explain the intuition. (e) Assume that an anti-government party wins the elections and achieves control over macroeconomic policy. Assume that the new government cuts the num- ber of civil servants and uses the cost savings to reduce the marginal tax rate on labour. Show what happens to the economy in the short run.
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Ansed After governmad keeps toP constant and instead Charges I to balance the bud... View the full answer
Related Book For
College Physics With An Integrated Approach To Forces And Kinematics
ISBN: 978-1260547719
5th Edition
Authors: Alan Giambattista
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