Using a graph representing the market for loanable funds, show and explain what happens to interest rates and investment if a) a reduction in military spending moves the government's budget from deficit into surplus. b) the government raises its tax on corporate profits. Other tax changes also are made, such that the government's deficit remains unchanged. c) a rise in life span of Americans.
Using a graph representing the market for loanable funds, show and explain what happens to interest rates and investment if a) a reduction in military spending moves the government's budget from deficit into surplus. b) the government raises its tax on corporate profits. Other tax changes also are made, such that the government's deficit remains unchanged. c) a rise in life span of Americans.
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy
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