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On February 26, 1964, President Lyndon Johnson signed the Revenue Act of 1964. Included in the legislation were revisions in the tax code that reduced

On February 26, 1964, President Lyndon Johnson signed the Revenue Act of 1964. Included in the legislation were revisions in the tax code that reduced the highest marginal rate in the U.S. tax code from 91% to 70%, while the bottom bracket fell from 20% to 14%. To respond to this question, assume that the economy is in equilibrium at full employment before the policy change. Using the aggregate expenditure model, explain the expected direction of the shift in the aggregate expenditure curve, describe the RGDP gap, and outline the steps needed to return the economy to full employment

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