Show graphically and explain what effect a decrease in taxes


Assuming the Marshall-Lerner condition holds and using the ZZ/Y and NX graphs, illustrate graphically and explain what effect (i) a decrease in taxes (ii) a decrease in foreign output (iii) a real depreciation will have on output, exports, imports, and net exports. Clearly label all curves and the initial and final equilibria.

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: Show graphically and explain what effect a decrease in taxes
Reference No:- TGS039138

Expected delivery within 24 Hours