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6. Changes in taxes The following graph shows the aggregate demand curve. Shift the aggregate demand curve on the graph to show the impact of a tax hike. 130 O 120 Aggregate Demand 110 PRICE LEVEL 100 90 Aggregate Demand 80 70 0 10 20 30 40 50 60 OUTPUTo 10 20 30 4o 50 60 OUTPUT Suppose the governments of two different economies, economy X and economy Y, implement a tax cut of the same size. The tax cut in economy X is temporary, while the tax cut in economy Y is permanent. The economies are identical in all other respects. The tax cut will have a smaller impact on aggregate demand in the economy with the v