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Refer to the Graph Shown

Question 19

Multiple Choice

Refer to the graph shown. Suppose the government borrows $50 million to finance an increase in its spending and that as a result, the level of investment is reduced by $50 million. In this case, the aggregate demand curve will: Refer to the graph shown. Suppose the government borrows $50 million to finance an increase in its spending and that as a result, the level of investment is reduced by $50 million. In this case, the aggregate demand curve will: A) shift from AD<sub>0</sub> to AD<sub>2</sub> but then back to AD<sub>1</sub>. B) shift from AD<sub>0</sub> to AD<sub>2</sub> but then out to AD<sub>3</sub>. C) shift from AD<sub>0</sub> to AD<sub>2</sub>. D) not shift.


A) shift from AD0 to AD2 but then back to AD1.
B) shift from AD0 to AD2 but then out to AD3.
C) shift from AD0 to AD2.
D) not shift.

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