Suppose in a closed economy, the government reduces her household income tax. Using relevant Classical Theories, explain its long-run effects on savings, real interest rates,s and investments.
Suppose in a closed economy, the government reduces her household income tax. Using relevant Classical Theories, explain its long-run effects on savings, real interest rates,s and investments.
Chapter20: Exchange Rates And The Macroeconomy
Section: Chapter Questions
Problem 3TY
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Question no1
Suppose in a closed economy, the government reduces her household income
tax. Using relevant Classical Theories, explain its long-run effects on savings,
real interest rates,s and investments.
Question no 2
Suppose Country A is a small open economy with a
concern of plausible supply chain issues, business firms in Country A tend to
increase their level of inventory.
Using relevant Classical Theories, explain how this would affect her net
capital outflow, real exchange rate and trade deficit in the long run.
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