Tax cut on income and interest rates in the two countries

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Two identical countries, A and B, can be described by the IS–LM model in the short run. The governments of both countries cut taxes by the same amount. The Central Bank of A follows a policy of holding a constant money supply. The Central Bank of B follows a policy of holding a constant interest rate. Compare the impact of the tax cut on income and interest rates in the two countries

Reference no: EM131108551

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