1. Assume AG = AT' and show by diagram:a. Show the effect of an AG on ASb. Show the effect of an AT on ASc. Will the magnitude of AS be the same for 1 and 2? Why? Or Why not?2. Draw the diagram for the loanable funds model. Suppose the tax laws are altered to providemore incentives for private saving. (Assume that total tax revenue T does not change). Whathappens to the interest rate and investment?

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Answered: 1. Assume AG = AT and show by diagram:…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Assume AG = AT and show by diagram: a. Show the effect of an AG on AS b. Show the effect of an AT' on AS c. Will the magnitude of AS be the same for 1 and 2? Why? Or Why not?