Use the following to answer questions: -(Figure: Classical Model of the Price Level) Refer to Figure: Classical Model of the Price Level. If the central bank increases the money supply such that aggregate demand shifts from AD₁ to AD₂, according to this classical model, the equilibrium point will: A) not change. B) immediately move from E₁ to E₂. C) immediately move from E₂ to E₁. D) immediately move from E₁ to E₃.

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In the classical model, an increase in the money supply shifts aggregate demand from AD1 to AD2, leading to an immediate increase in the price level, moving equilibrium from E1 to E3.

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