Using diagrams for aggregate expenditures (AE) and aggregate demand and supply (AD-AS), show the short- run effects the following event has on the Canadian economy. Be sure to identify the cause of any shift or movement along AE, AD, and/or AS and in each case, identify whether the event leads to an increase or decrease in national income (Y) and/or the price level (P).
ECONOMICS 110/111
- The government reduces tax rates.