Refer to the accompanying figure.
Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. B; C
B. D; C
C. D; B
D. A; B
Answer: C
Economics
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