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9. Suppose that real GDP has just fallen below potential GDP in a recession and the...

9. Suppose that real GDP has just fallen below potential GDP in a recession and the Council of Economic Advisers is trying to forecast the recovery from the recession. They are uncertain about whether Congress will pass the president’s proposed tax cut right away or will delay it a year. Trace out two possible scenarios with an AD-IA diagram that describes the impact of the uncertainty.

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