Consider the Following Two Headlines Appearing in the Same Day

Multiple Choice

Consider the following two headlines appearing in the same day: "Federal government announces major new infrastructure investments" and "New technology drives down transport costs." Choose the statement below that best describes the likely macroeconomic effects.

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