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Answer to Question #67091 in Macroeconomics for Grace Tsai

Question #67091
18. If an economy is at full employment, an income tax cut will result in:

A. a higher price level and more output in the short run, but only higher output in the long run.
B. a higher price level and more output in the short run, but only a higher price level in the long run.
C. an increase in LRAS and economic growth.
D. a decrease in AD and an increase in capacity.
E. an increase in AD and increased output in the long run.
Expert's answer
Answer: b

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