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-(Figure: Classical Versus Keynesian Macroeconomics) Refer to Figure: Classical Versus Keynesian Macroeconomics. According to the Keynesian view, if this economy shifts from AD₂ to AD₁, perhaps because of a large increase in government spending, the price level will _____ and real GDP will _____.

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-(Figure: Classical Versus Keynesian Macroeconomics) Refer to Figure: Classical Versus Keynesian Macroeconomics. According to the Keynesian view, if this economy shifts from AD₂ to AD₁, perhaps because of a large increase in government spending, the price level will _____ and real GDP will _____.

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According to the Keynesian view, an increase in government spending shifts the aggregate demand curve to the right, leading to an increase in both the price level and real GDP in the short run.

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