Refer to the Graph $\mathrm { AD } _ { 2 }$

Multiple Choice

Refer to the graph. If the economy is initially at equilibrium at the intersection of AD1 and AS1 and there is a tax cut, then, from a skeptical mainstream perspective, the immediate impact is that
Aggregate

A) demand would increase to AD $\mathrm { AD } _ { 2 }$ and aggregate supply would increase to A
$\mathrm { AS } _ { 2 }$
B) demand would increase to AD $\mathrm { AD } _ { 2 }$ and aggregate supply would remain at A
$\mathrm { AS } _ { 1 } .$
C) supply would increase to A $\mathrm { AS } _ { 2 }$ and aggregate demand would remain at AD
$A D _ { 1 }$
D) demand would remain at AD $A D _ { 1 }$ and aggregate supply would remain at A
$\mathrm { AS } _ { 1 }$