1. Use a saving-investment diagram to explain what hap- pens to saving, investment, and the real interest rate in each of the following scenarios in a closed economy. ja. Current output rises due to a temporary produc- tivity increase. Vb. The tax code changes so that business firms face higher tax rates on their revenue (offset by other lump-sum tax changes so there's no overall change in tax revenue).

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Savings,investment And The Financial System
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1. Use a saving-investment diagram to explain what hap-
pens to saving, investment, and the real interest rate in
each of the following scenarios in a closed economy.
ek
ja. Current output rises due to a temporary produc-
tivity increase.
V b. The tax code changes so that business firms face
ehigher tax rates on their revenue (offset by other
eb
on lump-sum tax changes so there's no overall change
in tax revenue).
Transcribed Image Text:1. Use a saving-investment diagram to explain what hap- pens to saving, investment, and the real interest rate in each of the following scenarios in a closed economy. ek ja. Current output rises due to a temporary produc- tivity increase. V b. The tax code changes so that business firms face ehigher tax rates on their revenue (offset by other eb on lump-sum tax changes so there's no overall change in tax revenue).
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