4. Aggregate Supply & Demand a) Suppose a temporary tax cut increases aggregate demand. Suppose the economy is initially in a long run steady state. In the space below, show how output and prices are affected in the short run and the long run. FPrices Output Short Run: Long Run: b} A temporary oil price decrease causes an increase in short run aggregate supply. Suppose the economy is initially in a long run steady state. In the space below, show how output and prices are affected in the short run and the long run. Prices Output Short Run: Long Run