FIGURE 24-1 -Refer to Figure 24-1. If the Economy Is Currently Producing

Multiple Choice

FIGURE 24-1
-Refer to Figure 24-1. If the economy is currently producing output of Y0 and the government initiates an expansionary fiscal policy adequate to close the output gap, the result is intended to be

A) the vertical line at Y* will shift to the left, intersecting the AS and AD curves at Y0.
B) no change in either price level or output, since expansionary fiscal policy is ineffective.
C) that the AS curve will shift to the right until point A is reached.
D) that the AS curve and the AD curve will shift left simultaneously.
E) that the AD curve will shift to the right until point B is reached.