During the recession of 2001, the U.S. Congress enacted a tax cut intended to increase consumption spending. Since the economy had not yet reached full employment, what happened to real GDP, unemployment, and the price level as the tax cut shifted AD to the right?

1. A tax cut raises consumption spending, shifting the AD curve to the right. 2. Because the economy was below full employment, the AD curve intersected a relatively flat part of the AS curve. 3. On that flat part, a rightward AD shift raises real GDP substantially while raising the price level only a little. 4. More output being produced also means more workers are needed, so unemployment falls. 5. Option A describes the opposite direction of every effect, so it is wrong on all three counts. _Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 10 "The Aggregate Demand/Aggregate Supply Model", section 10.4 | Shifts in Aggregate Demand_