Suppose an Initial Increase in Spending Cause the Aggregate Demand

Multiple Choice

Suppose an initial increase in spending cause the aggregate demand curve in Figure 10.2 increases by a total of $60 billion,from AD₂ to AD_0.Equilibrium GDP will

A) Increase by less than $60 billion because some of the additional spending drives up prices.
B) Increase by $60 billion.
C) Increase by more than $60 billion because of the multiplier effect.
D) Decrease because higher inflation causes unemployment.