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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.

Microeconomics, Economics

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