Suppose that Trumponomics—the economic policy of new President of the United States, Donald...

Question

Suppose that Trumponomics—the economic policy of new President of the United States, Donald Trump—seems likely to involve cutting taxes and increasing government spending. Illustrate what you think the effects of such a policy are likely to be on price and potential output in the long run using an AD-AS model in. [No discussion needed. Illustrate your diagram clearly.]

Robert · Accepted Answer

a) When the government plans to increase spending and cut taxes it would lead to rise in 
aggregate demand , it causes a multiplier effect by creating more jobs and lower taxes means 
more income for spending and gdp rises as a result.

Suppose that Trumponomics—the economic policy of new President of the United States, Donald Trump—seems likely to involve cutting taxes and increasing government spending. Illustrate what you think...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment