Draw AS/AD curve with the initial curves represented with AS, and AD, and the equilibrium with point A. Then show the short run effect of an agricultural disaster with point B. Then add the short run effect of a decline in income tax rates with point C. Is the price level in point C definitely higher/lower than point A? Is the output level in point C definitely higher/lower than point A?
Draw AS/AD curve with the initial curves represented with AS, and AD, and the equilibrium with point A. Then show the short run effect of an agricultural disaster with point B. Then add the short run effect of a decline in income tax rates with point C. Is the price level in point C definitely higher/lower than point A? Is the output level in point C definitely higher/lower than point A?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Draw AS/AD curve with the initial curves represented with AS, and AD, and the equilibrium with point A.
Then show the short run effect of an agricultural disaster with point B
Then add the short run effect of a decline in income tax rates with point C
Is the price level in point C definitely higher/lower than point A? Is the output level in point C definitely higher/lower than
point A?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7df8cf1b-bd1c-472e-98a6-ecc0aac0f9f2%2F81be7589-d6f8-419a-978c-f32a4391f07f%2Filmxypn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Draw AS/AD curve with the initial curves represented with AS, and AD, and the equilibrium with point A.
Then show the short run effect of an agricultural disaster with point B
Then add the short run effect of a decline in income tax rates with point C
Is the price level in point C definitely higher/lower than point A? Is the output level in point C definitely higher/lower than
point A?
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