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Refer to the Graph Above

Question 53

Multiple Choice

Refer to the graph above. If the economy is in initial equilibrium at AD<sub>1</sub> and AS<sub>1</sub>, then from a strict supply-side perspective a cut in taxes or tax rates would produce an equilibrium price and quantity of: A) P<sub>1</sub> and Q<sub>1</sub> B) P<sub>2</sub> and Q<sub>2</sub> C) P<sub>3</sub> and Q<sub>3</sub> D) P<sub>4</sub> and Q<sub>4</sub> Refer to the graph above. If the economy is in initial equilibrium at AD1 and AS1, then from a strict supply-side perspective a cut in taxes or tax rates would produce an equilibrium price and quantity of:


A) P1 and Q1
B) P2 and Q2
C) P3 and Q3
D) P4 and Q4

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