Use the AS/AD model to describe the effect of each of the following events on the...

 

  

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Use the AS/AD model to describe the effect of each of the following events on the economy of Snezhanka (a fictitious nation). Beginning with the economy in equilibrium carefully show the shift involved and the new equilibrium. State whether the P (price level) and RGDP at the new equilibrium are higher or lower. For each part of this question, start again at the original equilibrium. What will happen if: A. Taxes on households are decreased? (3 points) B. Taxes paid by firms are decreased? (3 points) C. The value of the national currency, the Snezhankan lev, declines in the international currency market? (3 points) D. A revolutionary new machine, the aparat, increases worker productivity? points) Use the AS/AD model to describe the effect of each of the following events on the economy of Snezhanka (a fictitious nation). Beginning with the economy in equilibrium carefully show the shift involved and the new equilibrium. State whether the P (price level) and RGDP at the new equilibrium are higher or lower. For each part of this question, start again at the original equilibrium. What will happen if: A. Taxes on households are decreased? (3 points) B. Taxes paid by firms are decreased? (3 points) C. The value of the national currency, the Snezhankan lev, declines in the international currency market? (3 points) D. A revolutionary new machine, the aparat, increases worker productivity? points)

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ANSWER AD AS model is a macro economic model that explains price level and output through the ... View the full answer