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Question: Suppose the capital gains tax rate were cut from 20% to 15%, which boosted the stock market by 5%. Assuming that 20% of the additional gains were realized, calculate the change in capital gains tax receipts under static ex ante assumptions. Now suppose a 5% boost in the stock market raised real GDP by ½%. Calculate the ex post change in the Federal budget position.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M93115118

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