Consider the long-run theory of investment,saving,and growth.For a given level of national income,a decrease in government tax revenues will cause

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In the long-run theory of investment, saving, and growth, a decrease in government tax revenues leads to a decrease in national saving. This is because the government will either have to reduce its own saving or borrow more, which reduces private saving through higher interest rates. Therefore, the decrease in tax revenues will reduce the overall saving in the economy.

Consider the Long-Run Theory of Investment,saving,and Growth