On the Graph Above,suppose the Economy Is at Point 1

question 46

Multiple Choice

On the graph above,suppose the economy is at point 1.Which sequence of points best illustrates the short-run and then long-run impacts of a permanent tax reduction? [Assume that potential output remains constant at
.]

• A)2,4,1
• B)7,2,5
• C)2,7,6
• D)7,8,1

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