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Use the following to answer questions: Use the following to answer questions:   -(Figure: Fiscal Policy II)  Refer to Figure: Fiscal Policy II. Suppose that this economy is in equilibrium at E<sub>1</sub>. If there is a decrease in government transfers, _____ will shift to the _____, causing a(n)  _____ in the price level and a(n)  _____ in real GDP. A)  AD<sub>2;</sub> left; increase; decrease B)  AD<sub>2;</sub> left; decrease; decrease C)  AD<sub>1;</sub> right; increase; increase D)  AD<sub>1;</sub> left; decrease; decrease
-(Figure: Fiscal Policy II) Refer to Figure: Fiscal Policy II. Suppose that this economy is in equilibrium at E1. If there is a decrease in government transfers, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP.


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