Refer to Figure 13.6 for the Following Questions

Multiple Choice

Refer to Figure 13.6 for the following questions.
Figure 13.6

-Suppose the federal government reduces income taxes. Assume that the movement from A to B in Figure 13.6 represents normal growth in the economy before the tax change. If the tax change is not effective and labour supply and savings do not increase because of the tax change, then the tax change will:

A) decrease the price level below P₂.
B) increase output above Y₂.
C) not change the price level.
D) shift LRAS₂ to the right.