Suppose the governments of two different economies economy, Microeconomics

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Suppose the governments of two different economies economy

Suppose the governments of two different economies, economy A and economy B, implement a permanent tax cut of the same size. Investment spending in economy A is less sensitive to changes in the interest rate than investment spending in economy B. The economies are identical in all other respects. The tax cut will have a smaller impact on aggregate demand in the economy with the a) higher sensitivity to changes in the interest rate, or b) lower sensitivity to changes in the interest rate

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Microeconomics: Suppose the governments of two different economies economy

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