What Happens in the Economy Illustrated in Figure 11-4 If

question 22

Multiple Choice

What happens in the economy illustrated in Figure 11-4 if government purchases increase by the amount necessary to achieve full employment?

• A)The AD curve shifts to the right, the SRAS curve shifts to the left, and long-run equilibrium is achieved.
• B)The AD curve shifts to the right, the price level increases, and long-run equilibrium is achieved.
• C)The AD curve shifts to the right, the price level increases, and unemployment increases.
• D)The AD curve shifts to the left, the price level increases, and employment decreases.
• E)The SRAS curve shifts to the left, the price level decreases, and long-run equilibrium is achieved.

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