Exhibit 16-5 Money, Investment and Product Markets

Exhibit 16-5 Money, investment and product markets

In Exhibit 16-5, a shift in aggregate demand from AD₁ to AD₂:

A) cannot raise real GDP because the economy is at full employment.
B) cannot raise real GDP because the aggregate supply curve is upward sloping at GDP₂.
C) will raise real GDP because the economy is operating below the full-employment level.
D) will cause the interest rate to increase from i₂ to i₁.