Which of the Following Would Be the Theoretical Outcome of Expansionary

question 26

Multiple Choice

Which of the following would be the theoretical outcome of expansionary fiscal policy in the following aggregate demand-aggregate supply model?

• A) The aggregate demand (A
• D) curve would shift from AD₁ to AD₂.
• B) The short-run aggregate supply (SRA
• S) curve would shift from SRAS₂ to SRAS₁.
• C) The SRAS curve would shift from SRAS₁ to SRAS₂.
• D) The AD curve would shift from AD₁ to AD₂ at the same time that the SRAS curve would shift from SRAS₁ to SRAS₂.
• E) The AD curve would shift from AD₂ to AD₁.

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