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The model of aggregate demand and aggregate supply can be used to explain what would happen to the price level and output level of the economy in the short run if the government reduces taxes on imported consumer goods. This can be illustrated with a diagram.
In the diagram, the aggregate demand (AD) curve is downward sloping and the aggregate supply (AS) curve is upward sloping. The equilibrium price level is determined by the intersection of the two curves. Initially, the equilibrium price level is P1 and the equilibrium output level is Y1.
When the government reduces taxes on imported consumer goods, the aggregate demand curve shifts to the right. This shift is represented by the movement from AD1 to AD2 in the diagram. The new equilibrium price level is P2, which is lower than the original price level. The new equilibrium output level is Y2, which is higher than the original output level.
In summary, the reduction in taxes on imported consumer goods leads to a decrease in the price level and an increase in the output level in the short run. This is due to an increase in aggregate demand.
What else can I help you with?
Is the government doing anything about global warming?
Well the Australian government is suppose to be doing something about it, not sitting back and talking about it. We need to start doing something here people!
Suppose government imposed a minimum wage above equilibrium wage Assuming nothing else changes what do you expect to happen to the resulting shortage of jobs as time progresses?
pikachu
Suppose the savings rate is 15 for every dollar the government collects in tax revenue and spends on public good and infrastructure the net result will be?
an increase in total investment by 85 cents
Suppose the savings rate is 15 percent. For every dollar the government collects in tax revenue and spends on public goods and infrastructure, the net result will be _____.?
an increase in total investment by 85 cents
Can two goods be inferior?
No,two goods cannot be inferior at the same time.We know that the demand for the inferior goods decreases with increase in income. suppose the income increases, to compensate this increase and to satisfy the new budget line and with the assumption that the consumer is rational,the amount of any one of the good must increase so as to leave the consumer with a bundle on his new budget line .If both the goods are inferior then the amount demanded of both these goods would decrease thus violating the axiom of revealed preferences. even if they are one of the good would be relatively more inferior to the other.
What is the opposete word of producer?
Consumer. A consumer is an individual or organization that uses products or services created by producers.
Why was Sistine Chapel imported to Michelangelo?
I suppose you mean why it was IMPORTANT to him. It was not until Pope Julius II commissioned Michelangelo to paint the ceiling.
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The government is not suppose to provide for the general welfare, it is suppose to promote the general welfare. There is a big dfference.
Differences between viking and Australian government?
They are the same i suppose
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chips
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Hahaha! do you happen to be doing a worksheet called Map Exercise: The Roman Empire?cuz i am too! haha(: well, maybe the slaves were imported to work for like the patricians? or maybe they were used in battle? as for the wild beasts...no clue.
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I suppose crocodiles and alligators are two examples.
What is a real world example of a revolutionary government?
I suppose the USA launched itself with a revolutionary government. So did the Soviet Union. So did France.
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Only those working for the federal government I suppose....?
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True or false suppose a country had five strong political parties each with a number of representatives in the government?
False
Why do you suppose the departments of Transportation Energy and Veterans Affairs were not created until well after the founding of the federal government?
someone answer! A+
