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PRICE LEVEL 3. Effects of fiscal policy Assume that the economy is currently producing at its potential output. Suppose the government decided to implement a tax cut to spur consumer spending, but everything else in the economy remained the same. On the following graph, shift the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), or both to show the intended short-run effect of this fiscal policy on the economy. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. REAL GOP SRAS BRAS ? Although fiscal policy may theoretically achieve the desired result in an economy, the time it takes for it to be approved and implemented, known as discretionary fiscal policy Immediately effective. , can cause

PRICE LEVEL 3. Effects of fiscal policy Assume that the economy is currently producing at its potential output. Suppose the government decided to implement a tax cut to spur consumer spending, but everything else in the economy remained the same. On the following graph, shift the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), or both to show the intended short-run effect of this fiscal policy on the economy. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. REAL GOP SRAS BRAS ? Although fiscal policy may theoretically achieve the desired result in an economy, the time it takes for it to be approved and implemented, known as discretionary fiscal policy Immediately effective. , can cause

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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PRICE LEVEL 3. Effects of fiscal policy Assume that the economy is currently producing at its potential output. Suppose the government decided to implement a tax cut to spur consumer spending, but everything else in the economy remained the same. On the following graph, shift the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), or both to show the intended short-run effect of this fiscal policy on the economy. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. REAL GOP SRAS BRAS ? Although fiscal policy may theoretically achieve the desired result in an economy, the time it takes for it to be approved and implemented, known as discretionary fiscal policy Immediately effective. , can cause
Transcribed Image Text:PRICE LEVEL 3. Effects of fiscal policy Assume that the economy is currently producing at its potential output. Suppose the government decided to implement a tax cut to spur consumer spending, but everything else in the economy remained the same. On the following graph, shift the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), or both to show the intended short-run effect of this fiscal policy on the economy. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. REAL GOP SRAS BRAS ? Although fiscal policy may theoretically achieve the desired result in an economy, the time it takes for it to be approved and implemented, known as discretionary fiscal policy Immediately effective. , can cause
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