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According to our three-equation model, how would an increase in direct taxes affect inflation in the short-run? In the medium-run?

  1. According to our three-equation model, how would an increase in direct taxes affect inflation in the short-run? In the medium-run?

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In the short run an increase in direct taxes would likely have a dampening effect on inflation Heres how it would work according to the threeequation ... blur-text-image

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