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Exhibit 10-7 -Refer to Exhibit 10-7. If Government Purchases Decrease,which of the Purchases

Question 150

Multiple Choice

Exhibit 10-7
Exhibit 10-7 -Refer to Exhibit 10-7. If government purchases decrease,which of the following is possible? A) The AD curve shifts leftward from AD<sub>2</sub> to AD<sub>1</sub>, the price level remains constant, and Real GDP falls. B) The AD curve shifts leftward from AD<sub>4</sub> to AD<sub>3</sub>, the price level falls, and Real GDP remains constant. C) The AD curve shifts rightward from AD<sub>1</sub> to AD<sub>2</sub>, the price level remains constant, and Real GDP rises. D) The AD curve shifts rightward from AD<sub>3</sub> to AD<sub>4</sub>, the price level rises, and Real GDP remains constant. E) a and b
-Refer to Exhibit 10-7. If government purchases decrease,which of the following is possible?


A) The AD curve shifts leftward from AD2 to AD1, the price level remains constant, and Real GDP falls.
B) The AD curve shifts leftward from AD4 to AD3, the price level falls, and Real GDP remains constant.
C) The AD curve shifts rightward from AD1 to AD2, the price level remains constant, and Real GDP rises.
D) The AD curve shifts rightward from AD3 to AD4, the price level rises, and Real GDP remains constant.
E) a and b

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