-In the Above Figure, Start with the Economy in Equilibrium

Multiple Choice

-In the above figure, start with the economy in equilibrium at point A. Then an unanticipated reduction in aggregate demand triggers a shift from AD₁ to AD₂. In the short run, this would cause

A) the price level to fall from P₁ to P₂, real Gross Domestic Product (GDP) to fall from Y₁ to Y₂, and the rate of unemployment to increase.
B) the price level to move from P₁ to P₂, but real Gross Domestic Product (GDP) would stay at Y₁.
C) the price level to fall by some amount less than P₁ but greater than P₂, and the rate of unemployment would decrease.
D) no change in either the price level or real Gross Domestic Product (GDP) , but a decrease in unemployment.