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