On the graph above, suppose the economy is at point 1. Which sequence
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 .] A) 7, 2, 5
B) 2, 4, 1
C) 2, 7, 6
D) 7, 8, 1
ANSWER
B
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