The government has just increased taxes. a. Demonstrate the effect on the price level and output in
Question:
a. Demonstrate the effect on the price level and output in the standard model.
b. How would your answer to a differ if there were partial crowding out?
c. How would your answer to a differ if there were complete crowding out?
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a In the standard model an increase in the tax rate will shift the AD curve to the left ...View the full answer
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