According to Figure 11.2, a shift from AD1 to AD2 will:
A. Move equilibrium to QF.
B. Eliminate the GDP gap because of the increase in output.
C. Move equilibrium to point Y because of an increase in the price level.
D. Move the economy to point Y and then the market mechanism will move the economy to point Z.
Answer:C
According to Figure 11.2, a shift from AD1 to AD2 will:
A. Move equilibrium to QF. B. Eliminate the GDP gap because of the increase in output. C. Move equilibrium to point Y because of an increase in the price level. D. Move the economy to point Y and then the market mechanism will move the economy to point Z.