Use an IS graph, an MP graph, and an AD/AS graph to show the effects of a decrease in taxes on short-run output in the two cases described in parts (a) and (b). Assume that the tax decrease is the same size in both cases and that the economy starts out at the same level of output in each case.

a) The economy starts out above the zero lower bound.

b) The economy starts out below the zero lower bound.

c) What do your answers to parts (a) and (b) say about the potential impact of the American Recovery and Reinvestment Act of 2009?