If the government were to increase income taxes, how would that affect output (RGDP) and the price level in the short run? In the long run? Describe how the aggregate supply and aggregate demand curves would be affected? How should uncertainty about the size of fiscal multipliers affect the reliance on monetary and fiscal policy as tools for stabilizing the economy?
If the government were to increase income taxes, how would that affect output (RGDP) and the price level in the short run? In the long run? Describe how the aggregate supply and aggregate demand curves would be affected? How should uncertainty about the size of fiscal multipliers affect the reliance on monetary and fiscal policy as tools for stabilizing the economy?
Chapter24: Fiscal Policy
Section: Chapter Questions
Problem 5P
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