Economy operating below its full-employment output level

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Reference no: EM13860720

Consider an economy operating below its full-employment output level. The government wants to enact a reduction in income taxes in an effort to restore the economy to full-employment output. On the graph that follows, shift one of the curves to illustrate the impact of the income tax cut on aggregate supply (SRAS) and aggregate demand (AD) that is emphasized by demand-side economists. Tool tip: Click and drag the curve. The curve will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. On the graph that follows, shift one of the curves to illustrate the dominant impact of the income tax cut according to supply-side economists. Use the dropdown menus to fill in the table and complete the causation chains for the demand-side effects and supply-side effects of the income tax cut.

Reference no: EM13860720

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