Suppose That Government Spending on Defense Rises by $50 Billion

Multiple Choice

Suppose that government spending on defense rises by $50 billion. What happens to the aggregate demand curve if the multiplier is greater than 1?

A) It shifts right by $50 billion at each price level.
B) It shifts right by more than $50 billion at each price level.
C) It shifts right by less than $50 billion at each price level.
D) The aggregate demand does not shift; the aggregate supply curve shifts right by $50 billion at each price level.