Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Figure: Policy Alternatives
-(Figure: Policy Alternatives) Refer to Figure: Policy Alternatives. If the economy is in equilibrium at Y₁ in panel (a) and the government decreases taxes, the result will likely be a(n) :

A) increase in unemployment.
B) decrease in interest rates.
C) decrease in aggregate demand.
D) increase in aggregate demand.