Supply-side fiscal policy Consider an economy operating below its full-employment output level. The government wants to
Posted: Wed Jul 06, 2022 6:34 pm
Supply-side fiscal policy
Consider an economy operating below its full-employment outputlevel. The government wants to enact a reduction in income taxes inan effort to restore the economy to full-employment output.
On the graph that follows, shift one of the curves to illustratethe impact of the income tax cut on aggregate supply (AS) andaggregate demand (AD) that is emphasized by demand-sideeconomists.
Tool tip: Click and drag the curve. The curve will snap intoposition, so if you try to move the curve and it snaps back to itsoriginal position, just try again and drag it a little farther.
On the graph that follows, shift one of the curves to illustratethe dominant impact of the income tax cut according to supply-sideeconomists.
Use the dropdown menus to fill in the following table tocomplete the causation chains for the demand-side effects andsupply-side effects of the income tax cut.
Demand-side Policy
Supply-side Policy
the parts that need to be filled in are in BOLDlettering
do not reference keynesian. it is demand and supply side. notkeynesian.
Consider an economy operating below its full-employment outputlevel. The government wants to enact a reduction in income taxes inan effort to restore the economy to full-employment output.
On the graph that follows, shift one of the curves to illustratethe impact of the income tax cut on aggregate supply (AS) andaggregate demand (AD) that is emphasized by demand-sideeconomists.
Tool tip: Click and drag the curve. The curve will snap intoposition, so if you try to move the curve and it snaps back to itsoriginal position, just try again and drag it a little farther.
On the graph that follows, shift one of the curves to illustratethe dominant impact of the income tax cut according to supply-sideeconomists.
Use the dropdown menus to fill in the following table tocomplete the causation chains for the demand-side effects andsupply-side effects of the income tax cut.
Demand-side Policy
Supply-side Policy
the parts that need to be filled in are in BOLDlettering
do not reference keynesian. it is demand and supply side. notkeynesian.