Which of the Following Correctly Describes the Mechanics of the Spending

Multiple Choice

Which of the following correctly describes the mechanics of the spending multiplier?

A) An initial increase in aggregate expenditures, such as an increase in government spending, shifts the aggregate expenditures curve upward vertically.
B) After the expenditures curve shifts upwards, the economy is not in equilibrium because aggregate expenditures now exceed aggregate output, leading to inventory depletion.
C) Real GDP increases in response to inventory depletion, eventually leading to a new higher level equilibrium real GDP.
D) All of the above answers are correct.