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If State Governments Decide to Cut Both Taxes and Government

question 135

Essay

If state governments decide to cut both taxes and government spending, what will happen to the national saving rate and interest rates?


Definitions:

Marginal Cost

The additional cost incurred to produce one additional unit of a good or service.

Average Variable Cost

The variable cost of production (costs that change with output level) divided by the quantity of output produced.

Product Differentiation

A marketing strategy where a company attempts to distinguish its product or services from the competition.

Competitive Price-searcher

A market structure where firms have some control over their selling price because their products are differentiated, but they still face competition.

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