Business, 27.07.2019 00:20 evanwall91

Suppose the governments of two different economies, economy a and economy b, implement a permanent tax cut of the same size. investment spending in economy a is less sensitive to changes in the interest rate than investment spending in economy b. the economies are identical in all other respects. the tax cut will have a smaller impact on aggregate demand in the economy with the a) higher sensitivity to changes in the interest rate, or b) lower sensitivity to changes in the interest rate

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