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Business, 08.04.2021 19:00 19colemankl

During a recession, economists traditionally focus on monetary and fiscal policies to bolster the economy. a. Use the aggregate demand – aggregate supply (AD-AS) model in Panel A to show the effect of a tax cut, in the form of a tax rebate, given to each taxpayer. If inflation is high during a recession, some economists advocate cuts on marginal tax rates, to help avoid additional inflation. b. Use the AD-AS model in Panel B to show the effect of marginal tax rate cuts.

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