Exhibit 11-4 -Refer to the Graph in the Exhibit.What Will Happen in Exhibit.What

Multiple Choice

Exhibit 11-4

-Refer to the graph in the exhibit.What will happen in the economy if government purchases increase by the amount necessary to achieve full employment?  

A)  The AD curve will shift to the right, the SRAS curve will shift to the left, and long-run equilibrium will be achieved. 
B)  The AD curve will shift to the right, the price level will increase, and long-run equilibrium will be achieved. 
C)  The AD curve will shift to the right, the price level will increase, and the expansionary gap will worsen. 
D)  The AD curve will shift to the left, the price level will increase, and the contractionary gap will worsen.