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The answer is B but why Consider a hypothetical country in which, initially, real GDP equals potential GDP. Suppose that the gov- ernment decreases taxes.

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The answer is B but why

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Consider a hypothetical country in which, initially, real GDP equals potential GDP. Suppose that the gov- ernment decreases taxes. All else equal (with regard to the AD-IA model), relative to the baseline level, in the long run, net exports are (A) higher. B lower. (C) the same

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