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Exhibit: Supply-Side Economics
-(Exhibit: Supply-Side Economics) If the economy's long-run aggregate supply curve is LRAS₁, and if the economy is in equilibrium at Y₁, supply-side economists would advocate

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Use the following to answer questions .
Exhibit: Supply-Side Economics

-(Exhibit: Supply-Side Economics) If the economy's long-run aggregate supply curve is LRAS₁, and if the economy is in equilibrium at Y₁, supply-side economists would advocate

Quizplus · Accepted Answer

Supply-side economists believe that tax cuts will stimulate investments and work efforts, leading to an increase in the long-run aggregate supply (LRAS) and short-run aggregate supply (SRAS) curves. This shift in LRAS and SRAS will lead to a higher equilibrium level of output (Y) and lower price levels. Therefore, in the given scenario, supply-side economists would advocate tax cuts to stimulate LRAS and SRAS and move them to LRAS₂ and SRAS₂.

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