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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

A policymaker claims that tax cuts led the economy out of a recession. Can we use the AD/AS diagram to show this?

To determine

Impact on equilibrium level of GDP and price level due to tax-cut is to be determined.

Explanation

Tax cut done by a government is a part of fiscal tool used by government. Any reduction in tax rate implies people are having more income in their hand, thereby would increase their spending capacity...

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