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In a large open economy, with excess unemployment, a permanent income tax cut increases demand for goods and services. a. Graph and describe the effects

In a large open economy, with excess unemployment, a permanent income tax cut increases demand for goods and services.

a. Graph and describe the effects of the tax cut on the market for labor.

b. Graph and describe the excess savings curve and net exports curve when imports exceed exports before the tax cut.

c. With a third graph, show and explain the effect of the tax cut on Net Exports and Excess Savings.

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