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Suppose the government reduces the corporate income tax rate. This will increase the return to firms for investing, which should investment and cause in capital in the long run. Show the long-run effect of this reduction in corporate tax rates on long-run aggregate supply. 1.) Use the line drawing tool to show the effect on long-run aggregate supply. Properly label this lino, 2.) Use the point drawing tool to show the new long-run equilibrium on the graph. Label this point "B". Carefully follow the instructions above, and only draw the required objects. The long-run impact of a reduction in corporate tax rates would be OA a decrease in long-run potential output while actually reducing inflation.. OB. an decrease in long-run potential output while creating additional upward movements in prices. OC. an increase in long-run potential output while actually reducing inflation OD. an increase in long-run potential output while creating additional upward movements in prices. Price Level, P LRAS, Real GOP AD₁

Suppose the government reduces the corporate income tax rate. This will increase the return to firms for investing, which should investment and cause in capital in the long run. Show the long-run effect of this reduction in corporate tax rates on long-run aggregate supply. 1.) Use the line drawing tool to show the effect on long-run aggregate supply. Properly label this lino, 2.) Use the point drawing tool to show the new long-run equilibrium on the graph. Label this point "B". Carefully follow the instructions above, and only draw the required objects. The long-run impact of a reduction in corporate tax rates would be OA a decrease in long-run potential output while actually reducing inflation.. OB. an decrease in long-run potential output while creating additional upward movements in prices. OC. an increase in long-run potential output while actually reducing inflation OD. an increase in long-run potential output while creating additional upward movements in prices. Price Level, P LRAS, Real GOP AD₁

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter23: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 10PA
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Suppose the government reduces the corporate income tax rate. This will increase the return to firms for investing, which should investment and cause in capital in the long run. Show the long-run effect of this reduction in corporate tax rates on long-run aggregate supply. 1.) Use the line drawing tool to show the effect on long-run aggregate supply, Properly label this lino, 2.) Use the point drawing tool to show the new long-run equilibrium on the graph. Label this point 'B'. Carefully follow the instructions above, and only draw the required objects. The long-run impact of a reduction in corporate tax rates would be OA a decrease in long-run potential output while actually reducing inflation.. OB. an decrease in long-run potential output while creating additional upward movements in prices. OC. an increase in long-run potential output while actually reducing inflation OD. an increase in long-run potential output while creating additional upward movements in prices. Price Level, P LRAS, Real GOP AD₁
Transcribed Image Text:Suppose the government reduces the corporate income tax rate. This will increase the return to firms for investing, which should investment and cause in capital in the long run. Show the long-run effect of this reduction in corporate tax rates on long-run aggregate supply. 1.) Use the line drawing tool to show the effect on long-run aggregate supply, Properly label this lino, 2.) Use the point drawing tool to show the new long-run equilibrium on the graph. Label this point 'B'. Carefully follow the instructions above, and only draw the required objects. The long-run impact of a reduction in corporate tax rates would be OA a decrease in long-run potential output while actually reducing inflation.. OB. an decrease in long-run potential output while creating additional upward movements in prices. OC. an increase in long-run potential output while actually reducing inflation OD. an increase in long-run potential output while creating additional upward movements in prices. Price Level, P LRAS, Real GOP AD₁
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