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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Will tax cuts that the public perceives to be temporary affect the SRAS and LRAS curves differently than tax cuts that are perceived to be permanent? Explain your answer.

To determine

Impact of temporary tax cuts and permeant tax cuts on short-run and long-run aggregate supply curve. 

Explanation

A temporary tax cut has not that much impact on the SRAS curve because people are aware that a temporary tax cut will change soon. Hence, they do not take any decisions as per the tax cut changes...

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