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Suppose the government increases both taxes and government purchases by $10,000. Assuming that the marginal propensity to consume is 0.75, calculate the change in private saving, government saving, and total saving. Then draw a graph of the loanable funds market and show graphically what happens to the equilibrium interest rate and investment as a result of this balanced-budget change.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91519676

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