Q​‌‍‍‍‌‍‌‍‍‍‌‌‌‍‌‌‌‌‌‌​uestion #1 1. Tax Cuts and Jobs Act The Tax Cuts and Job

Q​‌‍‍‍‌‍‌‍‍‍‌‌‌‍‌‌‌‌‌‌​uestion #1
1. Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act was a bill passed in December 2017 that provided income tax cuts for households, as well as tax cuts on corporate profits for firms. You are more than welcome to look up additional details about the bill if you would like some context, but the specifics of it are not necessary to answer the questions.
Prior to the bill passing:
A) What was the current GDP, Unemployment and Inflation in December 2017? You’ll need to look these up. Provides hyperlinks to your source(s).
B) Based on the data, where would you estimate the economy was relative to its potential? Explain.
*The best way to analyze it is to look at how close/far apart they are in percentage terms.
C) Regardless of your answer in “B” assume the economy starts at it’s potential. Use an AS/AD graph to illustrate the state of the economy. Label the equilibrium “A.”
D) Provide an explanation of the AS/AD graph, explain what each curve is, the variables etc.
After the bill passes
E) Illustrate what you think will happen on the AS/AD graph in the “short run.”
Label the result “B.”
F) Provide a thorough explanation of what you think will happen and why. This should include referencing your answer to D but also be more than an explan​‌‍‍‍‌‍‌‍‍‍‌‌‌‍‌‌‌‌‌‌​ation of the graph.
G) Illustrate what you think will happen on the AS/AD graph in the “long run.”
Label the result “C.”
H) Provide a thorough explanation of what you think will happen and why. This should include referencing your answer to F but also be more than an explanation of the graph.
I) Summarize the pros and cons of the policy. Based on your analysis would you argue for or against implementing the TCJA? Explain.
Question #2
2. Short Run vs Long Run (unrelated to Part 1)
*Reminder- Explanations should be thorough and written as if you were talking to a friend that has never taken this class. Illustrate your comprehension and avoid “jargon.”
A) Provide an explanation of what determines the state of the economy in the short run vs the long run.
-A few sentences/short paragraphs on each should suffice
B) They say monetary policy is “neutral” in the long run.
-Explain why monetary policy has an impact in the short run
-Explain why it is considered neutral in the long run.
-Utilize the framework of the AS/AD model to illustrate your explanation.
C) Fiscal policy is not considered “neutral” in the long run.
-Explain how fiscal policy can negatively impact the economy in the long run.
-Explain how fiscal policy can posit​‌‍‍‍‌‍‌‍‍‍‌‌‌‍‌‌‌‌‌‌​ively impact the economy in the long run.