On the graph above,a permanent tax reduction,assuming that there is a permanent effect on aggregate supply,is likely to move the economy from point 1 to point ________.

Question

Quizplus · Accepted Answer

A permanent tax reduction will increase aggregate supply, which will shift the aggregate supply curve to the right. This will move the economy from point 1 to point 2.

On the Graph Above,a Permanent Tax Reduction,assuming That There Is