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What is Effects of Tax Cuts on AD-AS Model about?

1. A reduction in income taxes shifts the AD curve right in the short run, increasing output and prices above the natural level. In the medium run, output returns to the natural level but prices and interest rates remain higher. Consumption increases while investment decreases due to the higher interest rates. 2. A decline in consumer confidence shifts the IS curve left in the short run, reducing output, prices, and interest rates. In the medium run, output returns to the natural level while prices and in

Author

elakhna

Language

EN