The Diagram Below Shows an AD/AS Model for a Hypothetical

Multiple Choice

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short-run equilibrium at point A. FIGURE 24-7 Refer to Figure 24-7.If the government takes no action to close the existing output gap,then

A) the AD curve will shift down until it intersects with the AS curve at point D.
B) the AD curve will shift up until it intersects with the AS curve at point B.
C) the AS curve will shift to the left until it intersects with the AD curve at point C.
D) the AS curve will shift to the right until it intersects with the AD curve at point E.
E) the AS curve can either shift to the right or left depending on the fiscal policy.