Passing a large tax increase that actually be enacted

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Reference no: EM13817907

Suppose that Congress is successful in passing a large tax increase that actually be enacted this year. Using three separate aggregate supply and aggregate demand graphs, show the effects of such a tax in

a. the classical model

b. the fixed price Keynesian model; and

c. the Keynesian model with an ordinary (upward-sloping) aggregate supply curve.

Reference no: EM13817907

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