The following graph shows the aggregate demand curve.
- Shift the aggregate demand curve on the graph to show the impact of a tax hike.
- Suppose the governments of two different economies, economy X and economy Y, implement the tax cut of the same size. The tax cut in economy X is temporary, while the tax cut in economy Y is permanent. The economies are identical in all other aspects.
The tax cut will have a smaller impact on the aggregate demand in the economy with the?