Figure 9.2
-Refer to Figure 9.2. Suppose the economy is at Point A, a decrease in taxes causes a movement to Point:
A) B.
B) D.
C) C.
D) E.

Question

Figure 9.2
-Refer to Figure 9.2. Suppose the economy is at Point A, a decrease in taxes causes a movement to Point:
A) B. 
B) D. 
C) C. 
D) E.

Quizplus · Accepted Answer

A decrease in taxes will increase disposable income, leading to an increase in aggregate demand and a movement along the AD curve to the right. Point B represents a higher level of output and a higher price level than Point A, so it is the correct answer.

Figure 9.2 -Refer to Figure 9.2. Suppose the Economy Is at Point