Assume that the economy is currently in short-run equilibrium, then personal income taxes decline. Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP)
As personal income taxes decline, households will have more after-tax income so they will be able to purchase more goods and services. The resulting increase in consumption will raise aggregate demand (AD). This would push the AD curve rightward, resulting in an increase in the price level and an increase in Real GDP.
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Expectations that bond prices will be rising in the near future are likely to decrease the demand for money.
a. true b. false
A business owner makes 100 . items a day. Each day he/she contributes 8 hours to produce those items. If hired, elsewhere he/she could have earned $250 an hour. The item sells for $15 each. Production does not stop during weekends. If the explicit costs total $150,00 . for 30 days, the economic profit for the month equals:
a. $300,000 b. $60,000 c. $450,000 d. $240,000