question 5
Suppose the economy is at a macroeconomic equilibrium as is shown on Slide 40 of the Attend section. The government decides to give every taxpayer a $500 tax refund.
a. What happens to the aggregate demand curve after the refund? If the government decides to give every taxpayer a $500 tax refund, the personal taxes of people goes down. This could mean the consumption of people goes up. This can mean there is an increase in aggregate demand. The demand curve shifts to the right.
b. What happens to the price level after this change? When the aggregate demand curve moves to the right, there is an increase in aggregate demand. In the short run, there is no change in aggregate supply and the price level increases after the tax
Suppose the economy is at a macroeconomic equilibrium as is shown on Slide 40 of the Attend section. The government decides to give every taxpayer a $500 tax refund.
a. What happens to the aggregate demand curve after the refund? If the government decides to give every taxpayer a $500 tax refund, the personal taxes of people goes down. This could mean the consumption of people goes up. This can mean there is an increase in aggregate demand. The demand curve shifts to the right.
b. What happens to the price level after this change? When the aggregate demand curve moves to the right, there is an increase in aggregate demand. In the short run, there is no change in aggregate supply and the price level increases after the tax