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Short-run and long-run impacts of the events

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Using the AS/AD model, discuss the likely short-run and long-run impacts of the following events with proper diagram(s), assuming that the government takes no further action:

a) An income tax rebate, giving each worker $2,000 (starting from the fullemployment level).

b) A contractionary monetary policy in which the interest rate is raised (starting from the full-employment level).

Reference no: EM133083955

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