Assume that all factors that effect economic growth remain constant. Suppose that the economy is initially operating at
Posted: Thu May 19, 2022 8:53 am
Assume that all factors that effect economic growth remain
constant. Suppose that the economy is initially operating at the
full employment level.
Consider that there is a deficit in government budget (G >
T). To reduce the deficit, the government plans to increase the
taxes.
What will be the effect of an increase in taxes in the short-run
and in the long-run? Explain the dynamics of employment, output,
and prices in the short-run and in the long-run by using the AS-AD
model.
Illustrate your answers by drawing the relevant graphs!!!!!
constant. Suppose that the economy is initially operating at the
full employment level.
Consider that there is a deficit in government budget (G >
T). To reduce the deficit, the government plans to increase the
taxes.
What will be the effect of an increase in taxes in the short-run
and in the long-run? Explain the dynamics of employment, output,
and prices in the short-run and in the long-run by using the AS-AD
model.
Illustrate your answers by drawing the relevant graphs!!!!!