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Running a budget balance

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Consider the following economy with Ta = 500 and YA = 10,000.

1) If G = 3500, Derive the equation of the BDA as a function of t (tax rate).

2) Find the tax rate at which the country will be running a budget balance.

3) Find the values of the deficits for the following tax rates: 20%, 22%, 25%, 30%, 32%, 35% and 40%.

Reference no: EM131043370

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