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Need some help with the following questions, thanks! Answer the foiiowing question assuming you are a suppiyside economist who is an adviser to the president.
Need some help with the following questions, thanks!
Answer the foiiowing question assuming you are a suppiyside economist who is an adviser to the president. If the economy is in recession, you would advocate that the government V in order to stimulate production and technological advances to shift the V curve. Suppose Congress enacts a tax reform law, and the average federal tax rate drops from 30% to 10%. Researchers investigate the impact of the tax cut and find that the income subject to the tax increases from $600 billion to $700 billion. The theoretical explanation is that workers have increased their work effort in response to the incentive of lower taxes. On the following graph, use the green point (triangle symbol) to plot the point corresponding to the income of $600 billion. Then use the orange point (square symbol) to plot the point corresponding to the income of $700 billion. 220 A 200 180 Incomes600 160 140 Incomes700 120 FEDERAL TAX REVENUE (Billions of dollars) Laffer Curve 0 0 10 20 30 40 50 60 70 80 90 100 110 FEDERAL TAX RATE (Percent) The change in income is represented by a movement along the portion of the Laffer curve.Indicate how each policy in the following table would change either the aggregate demand curve or the aggregate supply curve. Policy Change in Aggregate Demand or Change in Aggregate Supply Expansionary fiscal policy Contractionary fiscal policy Supply-side economics Cost-push inflationStep by Step Solution
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