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Suppose the government passes significant tax cuts on household income but does not reduce spending,so that the government budget deficit is larger.Use the Solow growth model of Chapter 8 to graphically illustrate the impact of the tax cut on the steady-state capital-labour ratio and the steady-state level of output per worker.Be sure to label the:
i.axes
ii.curves
iii.initial steady-state levels
iv.terminal steady-state levels
v.the direction curves shift.
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