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Macroeconomics 5th Edition by Olivier Blanchard
Edition 5ISBN: 978-0132159869Macroeconomics 5th Edition by Olivier Blanchard
Edition 5ISBN: 978-0132159869 Exercise 3
Spending shocks and the medium run
Suppose the economy begins with output equal to its natural level. Then, there is a reduction in income taxes.
a. Using the AS-AD model developed in this chapter, show the effects of a reduction in income taxes on the position of the AD, AS, IS, and LM curves in the medium run.
b. What happens to output, the interest rate, and the price level in the medium run What happens to consumption and investment in the medium run
Suppose the economy begins with output equal to its natural level. Then, there is a reduction in income taxes.
a. Using the AS-AD model developed in this chapter, show the effects of a reduction in income taxes on the position of the AD, AS, IS, and LM curves in the medium run.
b. What happens to output, the interest rate, and the price level in the medium run What happens to consumption and investment in the medium run
Explanation
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(a) The following graphs explain the AS-...
Macroeconomics 5th Edition by Olivier Blanchard
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