justification for it? 4. How does the Keynesian aggregate supply curve differ from the classic these specifications more appropriate than the other? Explain, being careful to state the time he zon to which your answer applies. . The aggregate supply and demand model looks, and sounds, very similar to the standard sun ply and demand model of microeconomics. How, if at all, are these models related? Technical a. If the government were to reduce income taxes, how would the reduction affect output and the price level in the short run? In the long run? Show how the aggregate supply and demand curves would be affected, in both cases. b. What is supply-side economics? Is it likely to be effective, given your answer to part a? 2. Suppose that the government increases spending from G to G' while simultaneously raising taxes in such a way that, at the initial level of output, the budget remains balanced. a. Show the effect of this change on the aggregate demand schedule. b. How does this affect output and the price level in the Keynesian case? Chegg c. How does this affect output and the price level in the classical case