The Democrats and Republicans are having their annual argument about the size of the government. The Republicans want to cut taxes for consumers and firms and cut government spending. The Democrats want to keep taxes and spending where they are. Use the four-diagram approach to show that while both plans could result in the same level of the interest rate in the long run, there would be differences in the level of the shares of GDP.

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The Answer of The Democrats and Republicans are having their annual argument about the size of the government. The Republicans want to cut taxes for consumers and firms and cut government spending. The Democrats want to keep taxes and spending where they are. Use the four-diagram approach to show that while both plans could result in the same level of the interest rate in the long run, there would be differences in the level of the shares of GDP.

The Democrats and Republicans Are Having Their Annual Argument About