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Suppose now that the government implements a stimulus package consisting in reducing the tax rate by half in period 1. with government consumption unchanged in
Suppose now that the government implements a stimulus package consisting in reducing the tax rate by half in period 1. with government consumption unchanged in both periods. How does this expansionary fiscal policy affect private consumption, the trade balance, the current account, and the primary and secondary fiscal deficits in period 1 and the tax rate in period 2? Briefly explain your result
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