What are the short and long-run effects of a tax cut when the economy is at full employment?

What are the short-run and long-run effects of a tax cut when the economy is at full employment and how would this look on the AD/AS diagram?

What are the short and long-run effects of a tax cut when the economy is at full employment?
In short-run there will be right-shift of the Aggregate demand curve along short-run horizontal aggregate supply. Price-level will remain the same, but GDP temporally will increase over normal level.


In long-run employment will move from over-employment to normal level and right-shift of the Aggregate demand curve will be not along the short-run horizontal aggregate supply curve but it rather will move over fixed long-run vertical aggregate supply curve. The effect will be change in price-level while employment will return to normal level (full).

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