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EC202-A4S10 - effects of a decrease in lump-sum taxes on...

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EC 202(01) - Assignment # 4 - S10  Question One a) Suppose that government reduces lump-sum taxes.  What will happen to the  IS curve?  Explain using diagrams. b) Using the IS-LM-FE version of the Keynesian model, explain the short-run and long-run 
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Unformatted text preview: effects of a decrease in lump-sum taxes on real income, the real interest rate and the general price level. c) In the long run, how will the decrease in lump-sum taxes affect consumption (C d ) and investment (I d )? Explain....
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