1. Predict what will happen to the economy in the short run if household debt rises and at the same time the government increases subsidies to firms.
Price level will ____________________
Real GDP will _____________________
Unemployment rate will ___________________________
2. Predict what will happen to the economy in the short run if there is an increase in taxes and at the same time there is an increase in tax rates.
Price level will ____________________
Real GDP will _____________________
Unemployment rate will ___________________________