Refer to Figure 18.2.Which of the following is not consistent with a shift from AS₂ to AS₁? A)Stagflation. B)A major natural disaster such as an earthquake. C)An inward shift of the production possibilities curve. D)A decrease in business taxes.

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A shift from AS₂ to AS₁ represents a decrease in aggregate supply. Option D, a decrease in business taxes, would increase aggregate supply and is therefore not consistent with the shift from AS₂ to AS₁. Option A, stagflation, is consistent with a decrease in aggregate supply and an increase in inflation. Option B, a major natural disaster such as an earthquake, could reduce the available factors of production, leading to a decrease in aggregate supply. Option C, an inward shift of the production possibilities curve, also represents a decrease in aggregate supply.