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Suppose an economy was in a long-run equilibrium but is now heating upall signs indicate it is entering a boom period. Suppose the fiscal policymakers

Suppose an economy was in a long-run equilibrium but is now heating upall signs indicate it is entering a boom period. Suppose the fiscal policymakers misinterpret the data and feel they must help the economy; they decide to make 25% tax cuts. Use the AD/AS model to describe the effect this policy will have on inflation and real GDP in the short run and the long run in the U.S.

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