Suppose that instead of taxing nominal capital income, the government taxed real capital income. Use appropriate graphs
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Suppose that instead of taxing nominal capital income, the government taxed real capital income.
Use appropriate graphs to explain and illustrate the effect that this change would have on:
a. The tax rate on capital income.
b. The supply of and demand for loanable funds.
c. Investment and the real interest rate.
Generational Effects of Fiscal Policy
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