-In the above figure, if the economy is initially at point B and taxes are raised, if potential GDP does not change then the economy will move to point
A) move to point D.
B) move to point A.
C) move to point C.
D) stay at point B.

Question

-In the above figure, if the economy is initially at point B and taxes are raised, if potential GDP does not change then the economy will move to point
A) move to point D. 
B) move to point A. 
C) move to point C. 
D) stay at point B.

Quizplus · Accepted Answer

Taxes raised will shift the aggregate demand curve to the left, resulting in a movement from point B to point A.

-In the Above Figure, If the Economy Is Initially at Point