In a normal ad-as diagram with an upward-sloping as curve, Ask an Expert

Economics

In a normal AD-AS diagram with an upward-sloping AS curve, if a tax decrease is combined with money expansion:

a AD will remain relatively unaffected but the interest rate will decrease
b AD will remain relatively unaffected but the interest rate will increase
c prices will increase but we cannot say what will happen to output or the interest rate
d AD, the price level, and output will all increase

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M951790

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