In the Medium Run, If Government Purchases Are Increased and Nominal

Multiple Choice

In the medium run, if government purchases are increased and nominal money supply is decreased, we can expect that

A) aggregate demand and prices will increase but interest rates will not change
B) aggregate demand, prices, and the interest rate will all decrease
C) aggregate demand and interest rates will decrease but prices will increase
D) the AD-curve will shift to the right and the AS-curve will shift to the left
E) the interest rate will increase while aggregate demand and prices may increase, decrease, or remain the same