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On the graph that follows, shift one of the curves to illustrate the impact of the increase in income taxes on aggregate supply (AS) and aggregate demand (AD) that is emphasized by Keynesian economists. PRICE LEVEL (CPI) Keynesian Effects REAL GDP (Billions of dollars) AS AD фефе (?)

On the graph that follows, shift one of the curves to illustrate the impact of the increase in income taxes on aggregate supply (AS) and aggregate demand (AD) that is emphasized by Keynesian economists. PRICE LEVEL (CPI) Keynesian Effects REAL GDP (Billions of dollars) AS AD фефе (?)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Need help with this. Please show how to move the AD and AS lines in both graphs. Also I provided the possible solutions for the last part. Thank you !

On the graph below, adjust one of the curves to demonstrate the impact of increased income taxes on aggregate supply (AS) and aggregate demand (AD), as emphasized by Keynesian economists. ### Diagram Explanation: **Title: Keynesian Effects** - **Axes:** - The vertical axis represents the Price Level (CPI). - The horizontal axis represents Real GDP (Billions of dollars). - **Curves:** - The upward-sloping line labeled "AS" signifies Aggregate Supply. - The downward-sloping line labeled "AD" signifies Aggregate Demand. - **Equilibrium:** - The intersection of the AS and AD curves represents the equilibrium point, indicating the current price level and real GDP. - **Adjustments:** - Sliders are present to adjust the position of the AD and AS curves to reflect changes, such as the economic impact of increased income taxes.
Transcribed Image Text:On the graph below, adjust one of the curves to demonstrate the impact of increased income taxes on aggregate supply (AS) and aggregate demand (AD), as emphasized by Keynesian economists. ### Diagram Explanation: **Title: Keynesian Effects** - **Axes:** - The vertical axis represents the Price Level (CPI). - The horizontal axis represents Real GDP (Billions of dollars). - **Curves:** - The upward-sloping line labeled "AS" signifies Aggregate Supply. - The downward-sloping line labeled "AD" signifies Aggregate Demand. - **Equilibrium:** - The intersection of the AS and AD curves represents the equilibrium point, indicating the current price level and real GDP. - **Adjustments:** - Sliders are present to adjust the position of the AD and AS curves to reflect changes, such as the economic impact of increased income taxes.
### Understanding the Impact of Income Tax Increases on Supply and Demand #### Graph Explanation The graph illustrates the supply-side effects of an increase in income taxes, featuring two key curves: 1. **Aggregate Supply (AS) Curve**: This upward-sloping orange line represents the total supply available at different price levels in the economy. 2. **Aggregate Demand (AD) Curve**: This downward-sloping blue line shows the demand for goods and services at various price levels. The intersection of AS and AD indicates the equilibrium price level and Real GDP. **Sliders for Adjustment**: Two sliders allow for the adjustment of the AD and AS curves to simulate economic shifts in response to income tax changes. #### Causation Chains: Keynesian and Supply-side Perspectives Use the dropdown menus below to complete the chains for each economic theory regarding income tax increases: **Keynesian Policy** 1. Increase in income taxes - \(_\_\_\_\_\_\_\_\_\_\_) consumption spending 2. \(_\_\_\_\_\_\_\_\_\_\_) aggregate demand 3. Real GDP and the price level \(_\_\_\_\_\_\_\_\_\_\_) **Supply-side Policy** 1. Increase in income taxes - \(_\_\_\_\_\_\_\_\_\_\_) the supply of labor/consumption spending 2. \(_\_\_\_\_\_\_\_\_\_\_) aggregate supply 3. Real GDP and the price level \(_\_\_\_\_\_\_\_\_\_\_) These causation chains help to analyze how income tax changes influence the economy from both Keynesian and supply-side perspectives.
Transcribed Image Text:### Understanding the Impact of Income Tax Increases on Supply and Demand #### Graph Explanation The graph illustrates the supply-side effects of an increase in income taxes, featuring two key curves: 1. **Aggregate Supply (AS) Curve**: This upward-sloping orange line represents the total supply available at different price levels in the economy. 2. **Aggregate Demand (AD) Curve**: This downward-sloping blue line shows the demand for goods and services at various price levels. The intersection of AS and AD indicates the equilibrium price level and Real GDP. **Sliders for Adjustment**: Two sliders allow for the adjustment of the AD and AS curves to simulate economic shifts in response to income tax changes. #### Causation Chains: Keynesian and Supply-side Perspectives Use the dropdown menus below to complete the chains for each economic theory regarding income tax increases: **Keynesian Policy** 1. Increase in income taxes - \(_\_\_\_\_\_\_\_\_\_\_) consumption spending 2. \(_\_\_\_\_\_\_\_\_\_\_) aggregate demand 3. Real GDP and the price level \(_\_\_\_\_\_\_\_\_\_\_) **Supply-side Policy** 1. Increase in income taxes - \(_\_\_\_\_\_\_\_\_\_\_) the supply of labor/consumption spending 2. \(_\_\_\_\_\_\_\_\_\_\_) aggregate supply 3. Real GDP and the price level \(_\_\_\_\_\_\_\_\_\_\_) These causation chains help to analyze how income tax changes influence the economy from both Keynesian and supply-side perspectives.
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