-In the above figure, if the economy is at point A, which of the following is true?
A) The economy might be at point A as a result of a recent cut in the tax rate.
B) Money wages can be expected to fall.
C) The economy is in a recession.
D) Point A is the long- run equilibrium point.

Question

-In the above figure, if the economy is at point A, which of the following is true?
A) The economy might be at point A as a result of a recent cut in the tax rate. 
B) Money wages can be expected to fall. 
C) The economy is in a recession. 
D) Point A is the long- run equilibrium point.

Quizplus · Accepted Answer

A cut in the tax rate can increase aggregate demand, potentially moving the economy to point A.

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