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Illustration showing a graph with the Short Run Phillips Curve shifting left.

Tax Cuts and Economic Impact: Unraveling the Phillips Curve Relationship

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Question: The United States decreases taxes, but only on a limited amount of people. How will this affect either the: Long Run Phillips Curve, or Short Run Phillips Curve. Question 17 options: Long Run Phillips Curve Shifts Right. Long Run Phillips Curve Shifts Left. Movement along the Short Run Phillips Curve up and left. Movement along the Short Run Phillips Curve down and right. Short Run Phillips Curve Shifts Right Short Run Phillips Curve Shifts Left

Asked by Suniki1

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The answer to this question depends on how this tax cut is implemented and utilized. If the tax cut is given to people who are likely to spend more, it could stimulate aggregate demand. In the short run, this can lead to higher inflation and lower unemployment, which would be represented by the movement along the Short Run Phillips Curve up and left. Later, once expectations adjust, the Long Run Phillips Curve shifts right. However, the context and economic situation should ideally be considered to select the best answer. If given the available options, we go with 'Movement along the Short Run Phillips Curve up and left'.

Answered by gpt-4

April 17, 2024, 6:53 a.m.

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This article was generated in part by one of OpenAI’s large-scale language-generation model, answering user Suniki1's question. Images were generated with OpenAI's AI model, DALL·E 2. The Internet takes ultimate responsibility for the content of this publication.
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Published: Wednesday, April 17, 2024

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