Figure 15-3 -As Shown in Figure 15-3, If People Behave According to Behave

Multiple Choice

Figure 15-3
-As shown in Figure 15-3, if people behave according to rational expectations theory, an increase in the aggregate demand curve from AD₁ to AD₂ will cause the economy to move

A) directly from E₁ to E₃ and then remain at E₃.
B) directly from E₁ to E₂ and then remain at E₂.
C) from E₁ to E₂ initially and then eventually move back to E₁.
D) from E₁ to E₂ initially and then eventually move to E₃.