Consider a closed economy, where the marginal propensity to consume is 0:9. What would be the...

Consider a closed economy, where the marginal propensity to consume is 0:9. What would be the e§ect on private, public and national saving of a $10 million decrease in both taxes and government spending? Would the equilibrium real interest rate increase, decrease, or stay the same?

Expert Solution

Rahul Sunny answered 2 years ago

Consider the long-run model of a closed economy with a marginal propensity to consume of 0.8....

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