Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Reducing taxes on private spending has the effect of the government budget deficit.
Is the blank increasing or decreasing?

Transcribed Image Text:Investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit.
Reducing taxes on private spending has the effect of
the government budget deficit.

Transcribed Image Text:What would you need to know in order to judge which of these two policies would be a more effective way to raise investment? Check all that apply.
The elasticity of private saving with respect to the after-tax real interest rate
The responsiveness of private saving to increases in investment
The response of private saving to changes in the government budget deficit
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