Use the Following to Answer Questions

question 224

Multiple Choice

Use the following to answer questions :
Figure: Classical Model of the Price Level
-(Figure: Classical Model of the Price Level) Look at the figure Classical Model of the Price Level. If the central bank increases the money supply such that aggregate demand shifts from AD₁ to AD₂, according to this classical model, the equilibrium point will:

• A)not change.
• B)immediately move from E₁ to E₂.
• C)immediately move from E₂ to E₁.
• D)immediately move from E₁ to E₃.

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