Use the IS-LM model (diagram) and the AD-AS diagram to analyze the impact of a fall in capital taxes (i.e. tax on capital stock: ?) over time (from SR to LR). Assume that the economy starts in general equilibrium (GE).Along with your diagram provide a detailed intuitive discussion [as done in lecture] of the impact on the whole economy. (Clearly label the diagram to illustrate SR vs. LR movements).

[7 points] Use the IS-IM model (diagram) and the AD-AS diagram to analyze the impact of a fall in capital taxes (i.e. tax on capital stock: 1:) over time (from SR to LR). Assume that the economy starts in general equilibrium (GE) .Along with your diagram provide a detailed intuitive discussion [as done in lecture] of the impact on the Whole economy. (Clearly label the diagram to illustrate SR vs. LR movements)