Answer the questions below:
(A)Suppose real GDP is less than potential GDP. Use a diagram with inflation on the vertical axis and percentage deviation of real GDP from potential GDP on the horizontal axis to show the short-run and long-run effects of a tax cut on the inflation rate and real GDP.
(B)Explain the tradeoff that has been made between unemployment and inflation.
(C)Suppose that, by the time the tax cut was in place, real GDP was again equal to potential GDP. Trace the short-run and long-run results on the same diagram.

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The Answer of Answer the questions below:
(A)Suppose real GDP is less than potential GDP. Use a diagram with inflation on the vertical axis and percentage deviation of real GDP from potential GDP on the horizontal axis to show the short-run and long-run effects of a tax cut on the inflation rate and real GDP.
(B)Explain the tradeoff that has been made between unemployment and inflation.
(C)Suppose that, by the time the tax cut was in place, real GDP was again equal to potential GDP. Trace the short-run and long-run results on the same diagram.

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