Consider the following policy scenarios. Construct a diagram reflecting the policy and fully explain by analysing the market for loanable funds and how the policies affect the economy's saving and investment. Please label diagram so it is easy to follow and understand. Scenario Policy 1: Suppose the government starts with a balanced budget and then, because of a tax cut or spending increase , starts running a budget deficit.
Consider the following policy scenarios. Construct a diagram reflecting the policy and fully explain by analysing the market for loanable funds and how the policies affect the economy's saving and investment. Please label diagram so it is easy to follow and understand. Scenario Policy 1: Suppose the government starts with a balanced budget and then, because of a tax cut or spending increase , starts running a budget deficit.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the following policy scenarios. Construct a diagram reflecting the policy and fully explain by analysing the market for loanable funds and how the policies affect the economy's saving and investment. Please label diagram so it is easy to follow and understand.
Scenario Policy 1: Suppose the government starts with a balanced budget and then, because of a tax cut or spending increase , starts running a budget deficit.
Scenario policy 2: Suppose the government changes the tax code, allowing individuals to reduce their taxable income if they save money in registered retirement saving plans (RRSPs)
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