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Unformatted text preview: (a) What are the consumptions in each period? What is the desired saving? (b) Now suppose there is a temporary increase in government spending by $100, and all the current and future tax will be imposed on this consumer. If the government spending is to be financed by current tax, what will happen to his current and future consumption, as well as the desired national savings? (c) Continue from part (b). Now suppose the increase in government spending is going to be financed by future tax, what will happen to his current and future consumption, as well as the desired national savings? 4. What effect does a temporary increase in government spending for example, to fight a war have on the desired consumption and desired national savings? Does it matter whether the temporary increase in government spending is financed by current tax or by future tax?...
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This note was uploaded on 04/15/2010 for the course ECON 291 taught by Professor J liu during the Summer '07 term at Simon Fraser.
- Summer '07
- J Liu