Candidate proposes to cut taxes

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Suppose that a Presidential candidate proposes to cut taxes by $120 billion in his or her first year in office. Assuming that the US is a large open economy and its MPC = 0.8, state the long run impact of this tax cut on Y, C, I, G, NX, r, ε, Sp, Sg, and S. State whether each of these values rises, falls, or remains constant, and, with as much specificity as possible, the magnitude of the changes. Draw all appropriate graphs.

Reference no: EM13885873

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