If an Increase in Net Taxes in the United States

Multiple Choice

If an increase in net taxes in the United States resulted in a very large decrease in aggregate output and a very small decrease in the price level, then the U.S. economy must have been

A) on the very steep part of the short-run aggregate supply curve.
B) on the very flat part of the short-run aggregate supply curve.
C) on the very steep part of the short-run aggregate demand curve.
D) on the very flat part of the short-run aggregate demand curve.