A country imposed a value-added tax of 7% on the consumption of the majority of its goods and services. Said government has a large and relentless govt budget deficit, and chose to impose the value-added tax to help deal with a lack of tax revenue. I'm wondering how this would look on the three-sector model, specifically, the effects that the creation of the consumption tax should have on this country's: real risk-free interest rate, quantity of real loanable funds per period, GDP price index, real GDP, nominal exchange rate of the against the dollar, and quantity of riyal traded per period.


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