Use the following to answer questions:
Figure: Fiscal Policy II 
-(Figure: Fiscal Policy II) Look at the figure Fiscal Policy II. Suppose that this economy is in equilibrium at E1. If there is an increase in government purchases, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP.
Definitions:
Exchange Rate
The price at which one currency can be exchanged for another in the foreign exchange market.
Raspberries
Edible fruits from plants in the genus Rubus, characterized by their aggregate structure of small drupelets.
Chocolate
A sweet food made from roasted and ground cacao seeds, typically eaten as confectionery or used to make beverages and to flavor or coat various foods.
Exchange Rate
The value of one currency for the purpose of conversion to another, determining how much of currency A is needed to purchase a unit of currency B.
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