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Figure: An Increase in Aggregate Demand Use the following to answer questions: Figure: An Increase in Aggregate Demand   -(Figure: An Increase in Aggregate Demand)  Refer to Figure: An Increase in Aggregate Demand. Assume that the economy is initially in long-run equilibrium at Y<sub>P</sub> and P<sub>1</sub>. Now suppose that there is an increase in the level of government purchases at each price level. This will: A)  shift the aggregate demand curve from AD<sub>2</sub> to AD<sub>1</sub>. B)  shift the aggregate demand curve from AD<sub>1</sub> to AD<sub>2</sub>. C)  lead to increased output and a decrease in the price level. D)  lead to decreased output and a decreased price level.
-(Figure: An Increase in Aggregate Demand) Refer to Figure: An Increase in Aggregate Demand. Assume that the economy is initially in long-run equilibrium at YP and P1. Now suppose that there is an increase in the level of government purchases at each price level. This will:


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