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The AD-AS model can be used to analyze the effects of fiscal policy, including changes in government spending or taxes.Suppose Congress votes to decrease corporate
The AD-AS model can be used to analyze the effects of fiscal policy, including changes in government spending or taxes.Suppose Congress votes to decrease corporate income tax rates. Use the AD/AS model to analyze the likely impact of the tax cuts on the macroeconomy. Show graphically and explain your reasoning. What exactly causes AD and/or AS to shift? What happens to GDP and the aggregate price level? Why?
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