Macroeconomics 11th Edition by Michael Parkin

تمرين 12

After you have studied Reading Between the Lines on pp. 340-341, answer the following questions.
a. What is the fiscal cliff?
b. Explain the effects of the fiscal cliff on the labor market tax wedge and the level of employment and potential GDP
c. Explain the effects of the fiscal cliff on aggregate demand and aggregate supply.
d. Draw a graph to show how the fiscal cliff changes real GDP and the output gap if the effect on aggregate demand is greater than that on aggregate supply.