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please draw the line too [Related to the Making the Connection| From 1991 to 2000, the Japanese economy grew so slowly that those years have

please draw the line too

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[Related to the Making the Connection| From 1991 to 2000, the Japanese economy grew so slowly that those years have become known as the "Lost Decade." Nevertheless, the Japanese government increased the national sales tax in 1997 because it had become concerned about its budget decit. As a result, real GDP decreased by 2.0% in 1998 and 0.1% in 1999. The graph to the right shows short-run equilibrium in the Japanese economy in 1997 prior to the sales tax increase. The graph assumes that growth had been slow but not negative, so the economy was at or near full employment. Show the effect of the sales tax on the IS-MP graph. 1.) Using the line drawing tool, show the effect of the national sales tax on the Japanese economy. Properly label any lines that you draw. 2.) Using the point drawing tool, plot the new equilibrium point. Label this point 'BIS'. Carefully follow the instructions above, and only draw the required objects. If the primary goal of the government is full employment, was increasing the national sales tax in 1997 a wise policy? O A. No, a fall in consumption due to the sales tax reduces real GDP further and increases unemployment. O B. Yes, increasing the national sales tax increases real GDP and thus employment. 0 C. Yes, increasing the national sales tax increases employment due to increased government purchases. 0 D. No, increasing the national sales tax decreases government purchases and increases unemployment. Real interest rate Y7 =0 Output gap

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