Figure 13-6 -Refer to Figure 13-6. Let Y = Real GDP, AE

Multiple Choice

Figure 13-6
-Refer to Figure 13-6. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption,
I_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous.
If real GDP produced is $4,000, how will equilibrium be restored in the economy?

A) Policymakers must conduct contractionary policies to move the economy toward its equilibrium real GDP.
B) Firms will reduce their output in subsequent periods, moving the economy toward its equilibrium real GDP.
C) The price level must rise to reduce aggregate expenditures and restore equilibrium.
D) The price level must fall to increase aggregate expenditures and restore equilibrium.