Analyze the SR and LR impact of a RISE in TAXES (T) on the economy. Assume that the economy starts in General Equilibrium. Recall that T is a tax on consumer income

a) What is the impact on economic activity in the Short Run (SR) ONLY? Provide a detailed discussion (the impact that includes the effect on Y, r, I, C, and L(i,Y))

b)show the impact of the rise in TAXES in the SR on the IS-LM diagram and the AD-AS diagram

c) the LR prices adjust. Does P rise or fall?

d) How is the adjustment in the Price Level over time illustrated in the IS-LM diagram? Shift in IS or shift in LM?

e) How is the adjustment in the Price Level over time illustrated in the AD-AS diagram? Movement along AD or shift in AD?