<article class="parent-module-container" role="presentation" style="padding-bottom: 0px; position: relative;"><div class="copyright-div" style="left: -64px;"><div style="position: relative;"><div class="copyright-div-message" style="position: fixed;">© Macmillan Learning</div></div></div><article class="module-container" data-module-id="53081000" role="presentation"><div id="control-frame-53081000" data-module-type="static_textfield" class="sl-module" style="position: relative; left: 0px; top: 0px; width: auto; height: auto; z-index: inherit;"><span class=" stix-font"><span><div class="raw-html"><p><strong>Aggregate Demand and Aggregate Supply — End of Chapter Problem</strong>        </p>
<p>For each of the following scenarios, predict how the price level and output will change over time from immediate impact to long-run impact. In each case, consider an economy that was initially producing at its level of potential output. </p>
<p><strong>a</strong>. The government passes legislation that increases corporate taxes by 25%.</p></div></span></span></div></article><article class="module-container" data-module-id="53081037" role="presentation"><div id="control-frame-53081037" data-module-type="sorting" class="sl-module" style="position: relative; left: 0px; top: 0px; width: auto; height: auto; z-index: inherit;"><div class="not-considered-in-grading-module-frame not-considered-in-grading-module-frame-icon MuiBox-root css-0"><div class="MuiBox-root css-j7qwjs"><div class="not-considered-in-grading-module-frame not-considered-in-grading-module-frame-icon MuiBox-root css-0" id="result-frame-53081037" data-test-id="result-frame-53081037"><div role="region" class="sl-sorting"><p class="sl-visually-hidden">You are currently in a sorting module. Turn off browse mode or quick nav, Tab to items, Space or Enter to pick up, Tab to move, Space or Enter to drop.</p><div class="sorting-bin-container"><div class="" data-rbd-droppable-id="1" data-rbd-droppable-context-id="0" style="text-align: center; flex: 1 1 100%; vertical-align: top; min-height: 260px; flex-direction: column; margin: 0px 8px;"><div style="text-align: center;"><span class=" stix-font"><span>Very Short Run</span></span></div><div role="region" aria-label="Very Short Run bin" class="sorting-dropzone"><div class="token-wrapper"><span>&nbsp;</span><div data-rbd-draggable-context-id="0" data-rbd-draggable-id="1-spacer-draggable"></div></div></div><span class="placeholder"></span></div><div class="" data-rbd-droppable-id="2" data-rbd-droppable-context-id="0" style="text-align: center; flex: 1 1 100%; vertical-align: top; min-height: 260px; flex-direction: column; margin: 0px 8px;"><div style="text-align: center;"><span class=" stix-font"><span>Short Run</span></span></div><div role="region" aria-label="Short Run bin" class="sorting-dropzone"><div class="token-wrapper"><span>&nbsp;</span><div data-rbd-draggable-context-id="0" data-rbd-draggable-id="2-spacer-draggable"></div></div></div><span class="placeholder"></span></div><div class="" data-rbd-droppable-id="3" data-rbd-droppable-context-id="0" style="text-align: center; flex: 1 1 100%; vertical-align: top; min-height: 260px; flex-direction: column; margin: 0px 8px;"><div style="text-align: center;"><span class=" stix-font"><span>Medium Run</span></span></div><div role="region" aria-label="Medium Run bin" class="sorting-dropzone"><div class="token-wrapper"><span>&nbsp;</span><div data-rbd-draggable-context-id="0" data-rbd-draggable-id="3-spacer-draggable"></div></div></div><span class="placeholder"></span></div><div class="" data-rbd-droppable-id="4" data-rbd-droppable-context-id="0" style="text-align: center; flex: 1 1 100%; vertical-align: top; min-height: 260px; flex-direction: column; margin: 0px 8px;"><div style="text-align: center;"><span class=" stix-font"><span>Long Run</span></span></div><div role="region" aria-label="Long Run bin" class="sorting-dropzone"><div class="token-wrapper"><span>&nbsp;</span><div data-rbd-draggable-context-id="0" data-rbd-draggable-id="4-spacer-draggable"></div></div></div><span class="placeholder"></span></div></div><br><div class="sorting-bin-container"><div class="" data-rbd-droppable-id="255" data-rbd-droppable-context-id="0" style="display: inline-block; text-align: center; flex: 1 1 0%; vertical-align: top;"><div style="text-align: center;"><span class=" stix-font"><span></span></span></div><div role="region" aria-label="Answer Bank bin" class="sorting-homebase labeling-occupied"><div class="answer-bank-header">Answer Bank</div><div class="token-wrapper"><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="0" data-rbd-draggable-id="8" tabindex="0" role="button" aria-describedby="rbd-hidden-text-0-hidden-text-0" data-rbd-drag-handle-draggable-id="8" data-rbd-drag-handle-context-id="0" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>output is somewhat lower</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="0" data-rbd-draggable-id="3" tabindex="0" role="button" aria-describedby="rbd-hidden-text-0-hidden-text-0" data-rbd-drag-handle-draggable-id="3" data-rbd-drag-handle-context-id="0" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>prices mostly adjust</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="0" data-rbd-draggable-id="2" tabindex="0" role="button" aria-describedby="rbd-hidden-text-0-hidden-text-0" data-rbd-drag-handle-draggable-id="2" data-rbd-drag-handle-context-id="0" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>prices decrease slightly</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="0" data-rbd-draggable-id="1" tabindex="0" role="button" aria-describedby="rbd-hidden-text-0-hidden-text-0" data-rbd-drag-handle-draggable-id="1" data-rbd-drag-handle-context-id="0" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>prices stay the same</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="0" data-rbd-draggable-id="5" tabindex="0" role="button" aria-describedby="rbd-hidden-text-0-hidden-text-0" data-rbd-drag-handle-draggable-id="5" data-rbd-drag-handle-context-id="0" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>output returns to the previous level</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="0" data-rbd-draggable-id="7" tabindex="0" role="button" aria-describedby="rbd-hidden-text-0-hidden-text-0" data-rbd-drag-handle-draggable-id="7" data-rbd-drag-handle-context-id="0" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>output is significantly decreases</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="0" data-rbd-draggable-id="4" tabindex="0" role="button" aria-describedby="rbd-hidden-text-0-hidden-text-0" data-rbd-drag-handle-draggable-id="4" data-rbd-drag-handle-context-id="0" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>prices fully adjust</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="0" data-rbd-draggable-id="6" tabindex="0" role="button" aria-describedby="rbd-hidden-text-0-hidden-text-0" data-rbd-drag-handle-draggable-id="6" data-rbd-drag-handle-context-id="0" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>output decreases fully</span></span></div></div></div></div><span class="placeholder"></span></div></div></div></div><div class="MuiBox-root css-v9yb92"></div></div></div></div></article><article class="module-container" data-module-id="53081001" role="presentation"><div id="control-frame-53081001" data-module-type="static_textfield" class="sl-module" style="position: relative; left: 0px; top: 0px; width: auto; height: auto; z-index: inherit;"><span class=" stix-font"><span><strong>b</strong>. Economies around the globe are experiencing a time of prosperity and, as a result, demand for U.S. exports increases.</span></span></div></article><article class="module-container" data-module-id="53081038" role="presentation"><div id="control-frame-53081038" data-module-type="sorting" class="sl-module" style="position: relative; left: 0px; top: 0px; width: auto; height: auto; z-index: inherit;"><div class="not-considered-in-grading-module-frame not-considered-in-grading-module-frame-icon MuiBox-root css-0"><div class="MuiBox-root css-j7qwjs"><div class="not-considered-in-grading-module-frame not-considered-in-grading-module-frame-icon MuiBox-root css-0" id="result-frame-53081038" data-test-id="result-frame-53081038"><div role="region" class="sl-sorting"><p class="sl-visually-hidden">You are currently in a sorting module. Turn off browse mode or quick nav, Tab to items, Space or Enter to pick up, Tab to move, Space or Enter to drop.</p><div class="sorting-bin-container"><div class="" data-rbd-droppable-id="1" data-rbd-droppable-context-id="1" style="text-align: center; flex: 1 1 100%; vertical-align: top; min-height: 260px; flex-direction: column; margin: 0px 8px;"><div style="text-align: center;"><span class=" stix-font"><span>Very Short Run</span></span></div><div role="region" aria-label="Very Short Run bin" class="sorting-dropzone"><div class="token-wrapper"><span>&nbsp;</span><div data-rbd-draggable-context-id="1" data-rbd-draggable-id="1-spacer-draggable"></div></div></div><span class="placeholder"></span></div><div class="" data-rbd-droppable-id="2" data-rbd-droppable-context-id="1" style="text-align: center; flex: 1 1 100%; vertical-align: top; min-height: 260px; flex-direction: column; margin: 0px 8px;"><div style="text-align: center;"><span class=" stix-font"><span>Short Run</span></span></div><div role="region" aria-label="Short Run bin" class="sorting-dropzone"><div class="token-wrapper"><span>&nbsp;</span><div data-rbd-draggable-context-id="1" data-rbd-draggable-id="2-spacer-draggable"></div></div></div><span class="placeholder"></span></div><div class="" data-rbd-droppable-id="3" data-rbd-droppable-context-id="1" style="text-align: center; flex: 1 1 100%; vertical-align: top; min-height: 260px; flex-direction: column; margin: 0px 8px;"><div style="text-align: center;"><span class=" stix-font"><span>Medium Run</span></span></div><div role="region" aria-label="Medium Run bin" class="sorting-dropzone"><div class="token-wrapper"><span>&nbsp;</span><div data-rbd-draggable-context-id="1" data-rbd-draggable-id="3-spacer-draggable"></div></div></div><span class="placeholder"></span></div><div class="" data-rbd-droppable-id="4" data-rbd-droppable-context-id="1" style="text-align: center; flex: 1 1 100%; vertical-align: top; min-height: 260px; flex-direction: column; margin: 0px 8px;"><div style="text-align: center;"><span class=" stix-font"><span>Long Run</span></span></div><div role="region" aria-label="Long Run bin" class="sorting-dropzone"><div class="token-wrapper"><span>&nbsp;</span><div data-rbd-draggable-context-id="1" data-rbd-draggable-id="4-spacer-draggable"></div></div></div><span class="placeholder"></span></div></div><br><div class="sorting-bin-container"><div class="" data-rbd-droppable-id="255" data-rbd-droppable-context-id="1" style="display: inline-block; text-align: center; flex: 1 1 0%; vertical-align: top;"><div style="text-align: center;"><span class=" stix-font"><span></span></span></div><div role="region" aria-label="Answer Bank bin" class="sorting-homebase labeling-occupied"><div class="answer-bank-header">Answer Bank</div><div class="token-wrapper"><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="1" data-rbd-draggable-id="1" tabindex="0" role="button" aria-describedby="rbd-hidden-text-1-hidden-text-1" data-rbd-drag-handle-draggable-id="1" data-rbd-drag-handle-context-id="1" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>prices stay the same</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="1" data-rbd-draggable-id="7" tabindex="0" role="button" aria-describedby="rbd-hidden-text-1-hidden-text-1" data-rbd-drag-handle-draggable-id="7" data-rbd-drag-handle-context-id="1" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>output is significantly increased</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="1" data-rbd-draggable-id="4" tabindex="0" role="button" aria-describedby="rbd-hidden-text-1-hidden-text-1" data-rbd-drag-handle-draggable-id="4" data-rbd-drag-handle-context-id="1" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>prices fully adjust</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="1" data-rbd-draggable-id="6" tabindex="0" role="button" aria-describedby="rbd-hidden-text-1-hidden-text-1" data-rbd-drag-handle-draggable-id="6" data-rbd-drag-handle-context-id="1" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>output increases fully</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="1" data-rbd-draggable-id="8" tabindex="0" role="button" aria-describedby="rbd-hidden-text-1-hidden-text-1" data-rbd-drag-handle-draggable-id="8" data-rbd-drag-handle-context-id="1" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>output is somewhat higher</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="1" data-rbd-draggable-id="5" tabindex="0" role="button" aria-describedby="rbd-hidden-text-1-hidden-text-1" data-rbd-drag-handle-draggable-id="5" data-rbd-drag-handle-context-id="1" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>output returns to the previous level</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="1" data-rbd-draggable-id="2" tabindex="0" role="button" aria-describedby="rbd-hidden-text-1-hidden-text-1" data-rbd-drag-handle-draggable-id="2" data-rbd-drag-handle-context-id="1" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>prices increase slightly</span></span></div></div><div style="margin: 5px 10px 5px 0px;"><div class="no-select token grab" data-rbd-draggable-context-id="1" data-rbd-draggable-id="3" tabindex="0" role="button" aria-describedby="rbd-hidden-text-1-hidden-text-1" data-rbd-drag-handle-draggable-id="3" data-rbd-drag-handle-context-id="1" draggable="false"><span class=" stix-font" style="font-size: 14px;"><span>prices mostly adjust</span></span></div></div></div></div><span class="placeholder"></span></div></div></div></div><div class="MuiBox-root css-v9yb92"></div></div></div></div></article></article>