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

Question 100

Essay

Graphically illustrate the traditional view of the long-run impacts of a debt-financed tax cut on :

a. saving, investment, and real interest rate using the classical model (Chapter 3 ).
b. steady state capital per worker and output per worker using the Solow growth model.

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blured image Panel A shows that in the long run the ...

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