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Category > Economics Posted 25 May 2017 My Price 5.00

The federal government in the United States has been running large budget deficits

2.15 The federal government in the United States has been running large budget deficits.

a. Use a market for loanable funds graph to illustrate the effect of the federal budget deficits. What happens to

the equilibrium real interest rate and the quantity of loanable funds? What happens to the level of saving and investment?

b. Now suppose that households believe that deficits will be financed by higher taxes in the near future, and

households increase their saving in anticipation of paying those higher taxes. Briefly explain how your analysis

in part (a) will be affected.

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Status NEW Posted 25 May 2017 08:05 AM My Price 5.00

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file 1495702920-Answer.docx preview (128 words )
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