Unformatted text preview: r providing an incorrect explanation. The
student lost 1 point in part (c)(ii) for not shifting the short-run Phillips curve.
The student earned 1 point in part (a) for the correctly labeled graph and vertical LRAS. The student lost
1 point in part (a) because the short-run equilibrium level of output is not to the left of the LRAS curve. The
student earned 1 point in part (b)(i) for stating that AD shifts to the right, but the explanation is insufficient
and did not earn a point. No connection is made between lower income taxes, higher disposable income,
and higher consumption spending. Both points in part (b)(ii) were lost because the Phillips curve graph has
a label of interest rate on the vertical axis and because the moveme...
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