This question is related to the concept of twin deficits. For a small economy, twin deficits are related if an increase in the government budget deficit raises the current account deficit only it affects desired national saving or desired consumption in the home country. Benefiting from equation/s and graph/s, show this result is true when the government budget deficit resulting from a tax cut (T). Note: In order to solve the question, please assume that initially the small open economy is giving current account (CA) deficit!!

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