Use the Following to Answer Questions

question 112

Multiple Choice

Use the following to answer questions:
Figure: The Multiplier
-(Figure: The Multiplier) Refer to Figure: The Multiplier. If this economy is at Y₁ and investment spending increases:

• A) AD₁ will shift to the left, reflecting a multiplied decrease in real GDP at every price level.
• B) AD₁ will shift to the right, reflecting a multiplied increase in real GDP at every price level.
• C) an upward movement along the AD₁ will take place, reflecting an increase in the price level.
• D) a downward movement along the AD₁ will take place, reflecting a decrease in the price level.

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