For This Question,assume That the Economy Is Initially Operating at the Natural

Multiple Choice

For this question,assume that the economy is initially operating at the natural level of output.A simultaneous reduction in taxes and reduction in the money supply will cause which of the following?

A) an increase in output and an increase in the aggregate price level in the short run
B) a reduction in output and a reduction in the nominal wage in the short run
C) a reduction in investment in the medium run
D) a reduction in the interest rate in the medium run
E) an increase in the aggregate price level,no change in output,and no change in the interest rate in the medium run