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Impact private investment demand of domestic firms

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Reference no: EM132955755

Use the definition of the current account to answer the following.

a) Assume the Biden Administration raises taxes on the wealthy portion of the income distribution. What is the result of this policy on the government's budget? How would the current account evolve as well as the level of debt held by the US?

b) Illustrate and describe what effects the policy from part a) would have on real interest rates and volume in bond markets. (draw the graph)

c) How would this ultimately impact private investment demand of domestic firms?

Reference no: EM132955755

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