Answer the Questions Below

question 123

Essay

Answer the questions below:
(A) Suppose real GDPis less than potental GDP. Use a diagram with inflation an the vertical axis and percentage deviation of real GDP fram potential GDP an the harizantal axis to show the short-rus and lang-run effects of a tax cut an the infletion rate and real GDP
(B) Exalan the tradeoff that has been made between unemplayment and inflation.
(C) Suppose that by the time the tax cut was in place, real GDP wras again equal to patential GDP. Trace the short-run and long-run results an the same diagram.

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Definitions:

Time Period Assumption

The long life of a company can be reported in shorter time periods, such as months, quarters, and years.

Business Entity

A corporation, partnership, association, or any other legal entity engaged in economic activities, such as selling goods or services.

Quarters

A three-month period on a financial calendar that acts as a basis for reporting earnings and paying dividends.

Operating Income

The profit realized from a business's core operations, excluding deductions for interest and taxes.