Suppose that the government cuts taxes in response to a recessionary gap, but because of legislative delays

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Suppose that the government cuts taxes in response to a recessionary gap, but because of legislative delays the tax cut is not put in place for 18 months. Assuming that the government's objective is to return output and the inflation rate to their long-run levels, use an AD-AS diagram to illustrate how this policy action might actually prove to be counterproductive.
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Principles of Economics

ISBN: 978-0073511405

5th edition

Authors: Robert Frank, Ben Bernanke

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