Graphically illustrate the traditional view of the short-run impacts of a debt-financed tax cut on:
a. interest rates and output in a closed economy in the short-run using the IS-LM model, and
b. exchange rates and output in a small open economy with a flexible exchange rate in the short run using the Mundell-Fleming model.

Question

Quizplus · Accepted Answer

The Answer of Graphically illustrate the traditional view of the short-run impacts of a debt-financed tax cut on:
a. interest rates and output in a closed economy in the short-run using the IS-LM model, and
b. exchange rates and output in a small open economy with a flexible exchange rate in the short run using the Mundell-Fleming model.

Graphically Illustrate the Traditional View of the Short-Run Impacts of a Debt-Financed