FIGURE 27-4 -Refer to Figure 27-4. the Economy Begins in Equilibrium at Equilibrium

FIGURE 27-4
-Refer to Figure 27-4. The economy begins in equilibrium at E0. Now consider an expansion of the money supply. The initial effect is

A) a shift of the AD curve to AD1 and an increase in real GDP to Y1.
B) a shift of the AS curve to AS1 and a decrease in real GDP to Y2.
C) a shift of the AD curve to AD1, and then a shift back to AD0 to restore equilibrium at E0.
D) a simultaneous shift of AD to AD1 and AS to AS1, resulting in a new equilibrium at E2.
E) no change in the short-run equilibrium or level of real GDP.