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In: Economics

Tax Policy What would happen to inflation, GDP, unemployment and economic growth in the short run...

  1. Tax Policy
  1. What would happen to inflation, GDP, unemployment and economic growth in the short run and the long run if we cut income taxes by 100 billion and the marginal propensity to consume (MPC) is equal to .75? Make sure to include the appropriate equation and an analysis of the impacts of C, I, G, NX, AD, AS, P, Q, inflation and economic growth.
  2. How would this tax cut impact the National Budget and the National Debt? What are the pros and cons of running a deficit? Would you support such a tax cut and for whom should we impose the tax cut?
  3. What would happen to these variables and the AD/AS graph if we had a corporate tax cut of 100 billion instead?
  4. What are 4 policies that the Supply-side Model supports?

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Expert Solution

Rahul Sunny answered 8 months ago
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