Suppose an initial increase in spending cause the aggregate demand curve in Figure 10.2 increases by a total of $60 billion,from AD₂ to AD_0.Equilibrium GDP will A)Increase by less than $60 billion because some of the additional spending drives up prices. B)Increase by $60 billion. C)Increase by more than $60 billion because of the multiplier effect. D)Decrease because higher inflation causes unemployment.

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The Answer of Suppose an initial increase in spending cause the aggregate demand curve in Figure 10.2 increases by a total of $60 billion,from AD₂ to AD_0.Equilibrium GDP will A)Increase by less than $60 billion because some of the additional spending drives up prices. B)Increase by $60 billion. C)Increase by more than $60 billion because of the multiplier effect. D)Decrease because higher inflation causes unemployment.

Suppose an Initial Increase in Spending Cause the Aggregate Demand