Consider the Following News Headline: "Governments Plan Massive Hospital Construction

Multiple Choice

Consider the following news headline: "Governments plan massive hospital construction programs across the country." Choose the statement below that best describes the likely macroeconomic effects.

A) The AD curve shifts to the left; the price level falls and real GDP falls.
B) The AD curve shifts to the right; the price level rises and real GDP rises.
C) The AD curve shifts to the right and the AS curve shifts to the left; the price level rises and the effect on real GDP is indeterminate.
D) The AD curve shifts to the left and the AS curve shifts to the right; the price level falls and the effect on real GDP is indeterminate.
E) The AD and AS curves both shift to the right; the effect on the price level is indeterminate and real GDP rises.