Refer to the Graph $\mathrm { AD } _ { 2 }$

question 258

Multiple Choice

Refer to the graph. If the economy is initially at equilibrium at the intersection of AD1 and AS1 and there is a tax cut, then, from a skeptical mainstream perspective, the immediate impact is that
Aggregate

• A) demand would increase to AD \(\mathrm { AD } _ { 2 }\) and aggregate supply would increase to A \(\mathrm { AS } _ { 2 }\)
• B) demand would increase to AD \(\mathrm { AD } _ { 2 }\) and aggregate supply would remain at A \(\mathrm { AS } _ { 1 } .\)
• C) supply would increase to A \(\mathrm { AS } _ { 2 }\) and aggregate demand would remain at AD \(A D _ { 1 }\)
• D) demand would remain at AD \(A D _ { 1 }\) and aggregate supply would remain at A \(\mathrm { AS } _ { 1 }\)

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Definitions:

Material

Substance or substances out of which a thing is or can be made.

Nonliving Things

Objects or substances that do not possess life, characterized by an inability to grow, metabolize, respond to stimuli, reproduce, or adapt.

Synthesis of ATP

The biological process of generating ATP (adenosine triphosphate), the energy currency of the cell, through various pathways including cellular respiration and photosynthesis.

Chemical Reactions

Processes by which substances interact to form new products, involving the rearrangement of atoms and changes in chemical properties.