Economy starting at the long run equilibrium

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First, draw the AD, SRAS, LRAS diagram for the U.S. economy starting at the long run equilibrium. Label your graph thoroughly. Second, show on your diagram what happens to the U.S. economy when the U.S. government lowers income taxes across the board on all its citizens. Be sure to show on the diagram the short run effect and then, overtime, the long run effect on the U.S. economy. Label your graph thoroughly. Third, briefly explain how this event affects U.S. GDP, prices, and employment in the short run and the long run.

Reference no: EM131169549

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