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Figure 7-6 -Refer to Figure 7-6. Suppose the Economy Is Initially at Is

Question 164

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Figure 7-6 Figure 7-6 -Refer to Figure 7-6. Suppose the economy is initially at point A. Now suppose that there is an increase in government purchases. In the short-run, A) the price level rises to P<sub>b</sub> and real GDP increases to Y<sub>b</sub>. B) the price level rises to P<sub>d</sub>. C) the aggregate supply curve shifts up to SRAS<sub>2</sub>. D) the economy's potential output increases to Y<sub>b</sub>.
-Refer to Figure 7-6. Suppose the economy is initially at point A. Now suppose that there is an increase in government purchases. In the short-run,


A) the price level rises to Pb and real GDP increases to Yb.
B) the price level rises to Pd.
C) the aggregate supply curve shifts up to SRAS2.
D) the economy's potential output increases to Yb.

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