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aggregate expenditure model and tax cuts

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What were the key provisions of the tax cuts passed by Congress in spring 2003?

How would these tax cuts be represented by the aggregate expenditure model and the IS curve?

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Solution Summary

Tax cuts and their effect on the IS LM model are examined.

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There were four primary effects of the lower tax rates. Firstly, over all tax rates fell to 35% from 38.6% for the wealthiest tax payers; to 33% from 35%; to 28% from 30% and to 25% from 27% for others. Secondly, the "marriage penalty" was eliminated by increasing the ...

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