In Figure 11

question 110

Multiple Choice

In Figure 11.1,assume that Q_F is full-employment output and the level of aggregate spending is represented by AD₁.If AD₁ increases to AD₂,which of the following statements is correct?

• A)Full employment will be reached.
• B)Excess AD and inflation will be the result.
• C)Full employment will not be reached because some of the additional spending results in higher prices rather than higher output.
• D)A lower price level will result.

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