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Suppose the U.S. government announces that it will bring the federal budget deficit to zero, over the next ten years, with no change in tax
Suppose the U.S. government announces that it will bring the federal budget deficit to zero, over the next ten years, with no change in tax rates. Describe the effects of such a policy according to the three business cycle models , assuming that the policy is fully credible.
Three business cycle models;
1-Real business cycle model
2-New Keynesian model
3-Traditional Keynesian model
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