-Refer to Exhibit 17-4 Assume That the Starting Point in Graphs

Multiple Choice

-Refer to Exhibit 17-4 Assume that the starting point in graphs (a) and (b) in Exhibit 17-4 is point 1.After a decrease in income taxes,there would be a ______________________ which would cause a movement along the production function from point 1 to point ______________.The result would be a shift of the LRAS curve from LRAS₁ to _______________ resulting in _______________..

A) leftward shift of the labor supply curve from S_L1 to S_L3; movement along the production function to point 3; LRAS₃; a shrinking economy
B) rightward shift of the labor supply curve from S_L1 to S_L2; movement along the production function to point 3; LRAS₃; a shrinking economy
C) leftward shift of the labor supply curve from S_L1 to S_L3; movement along the production function to point 2; LRAS₂; economic growth
D) rightward shift of the labor supply curve from S_L1 to S_L2; movement along the production function to point 2; LRAS₂; economic growth