Impact of Fiscal Contraction on Closed Economy Long Run Model - Intermediate Macroeconomics

[@economicurtis]

(thanks for the time stamp) - a fiscal contraction can be one of two things in this model, either a decrease in gov't spending or an increase in taxes (though, admittedly people usually mean a decrease in G). Next, look at the savings equation (S = ...), and we discover the effect of an increase in Taxes is an increase in savings, due to those two negative signs. I think that's all I meant in that section. You can follow the same steps to discover the effect of a change in G as well.

[@economicurtis]

I'm not sure this is the best model to answer that question (perhaps I don't understand the question). I have a feeling the question is: "if the government introduces an INVESTMENT tax credit, while keeping S constant", then this is a shift outward in the I(r) curve.... and I think you can do the rest! Otherwise, I'm not sure you can answer that question well with this model....

[@04lewzale]

so what would happen if the goverment introduces an increase in tax credit but with national savings fixed, what would the real intrest rate do?

[@morketh]

In the aggregate-demand/aggregate-supply model, an increase in taxes causes ____ to ____ in the long run. A output; increase B output; decrease C the price level; increase D the price level; decrease

[@pastristdutou]

Bro, thanks a lot for your video, many thanks!!!!!!!!!!