A number of countries, like Greece and the United Kingdom, have in the past few years responded to growing and problematic levels of debt by introducing "austerity" policies:
significant cuts to government purchases (G) combined with significant tax (T) increases.
These policies have been controversial among both economists and the public.
(a) Using the AS/AD model, what is the short-run effect of the austerity policy on prices
and output?

I
(b) What is the short-run effect of the austerity policy on the unemployment rate?

(c) Using the AS/AD, what is the long-run effect of austerity on prices and output?

(d) What is the long run effect of austerity on the unemployment rate?