Fiscal Policy Analysis
![Fiscal Policy Analysis -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 if taxes are reduced for one year, then returned to the original level? [Assume that potential output remains constant at Y .] A) 7, 2, 5 B) 2, 4, 1 C) 2, 7, 6 D) 7, 8, 1](https://d2lvgg3v3hfg70.cloudfront.net/TB5034/11eab3ba_70ed_2555_a5fb_33d86e1bcf70_TB5034_00_TB5034_00_TB5034_00_TB5034_00_TB5034_00.jpg)
-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 if taxes are reduced for one year, then returned to the original level? [Assume that potential output remains constant at Y ![Fiscal Policy Analysis -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 if taxes are reduced for one year, then returned to the original level? [Assume that potential output remains constant at Y .] A) 7, 2, 5 B) 2, 4, 1 C) 2, 7, 6 D) 7, 8, 1](https://d2lvgg3v3hfg70.cloudfront.net/TB5034/11eab3ba_70ed_4c66_a5fb_adbf60e48236_TB5034_11.jpg)
.]
A) 7, 2, 5
B) 2, 4, 1
C) 2, 7, 6
D) 7, 8, 1
Correct Answer:
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