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Suppose a law was passed requiring the federal government to balance its budget every year. If Government Spending and Transfer Payments are left unchanged, calculate
Suppose a law was passed requiring the federal government to balance its budget every year. If Government Spending and Transfer Payments are left unchanged, calculate what the tax rate would have to be to maintain a balanced budget given all of the information above. (Hint: the aggregate level of income does not stay constant if tax rates change .) Also , provide a written analysis of your results .
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