Suppose that the government increases taxes and government purchases by equal amounts. What happens to the interest

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Suppose that the government increases taxes and government purchases by equal amounts. What happens to the interest rate and investment in response to this balanced budget change? Does your answer depend on the marginal propensity to consume?

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Macroeconomics

ISBN: 978-1464168505

5th Canadian Edition

Authors: N. Gregory Mankiw, William M. Scarth

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Question Posted: Dec 31, 2015 01:33 AM

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Suppose that the government increases taxes and government purchases by equal amounts. What happens to the interest

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To determine the effect on investment of an equal increase in both taxes and government spending con...View the full answer

Macroeconomics

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