Decrease in business tax is a supply side fiscal policy and it is going to increase the investment demand. Further, decrease in unused capacity, means firms have to plan for additional capacity and investment demand increases.
In the long run, there is natural rate of unemployment where the cyclical unemployment is zero. It means that economy is using its resources to the full capacity and potential output is achieved.
It is also shown by the wealth effect that when price decrease, then purchasing power increases, making people to demand more. So, AD curve is downward sloping.
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