Suppose That the Correlation Between Government Spending and the Differ-

Suppose that the correlation between government spending and the differ- ence between actual and potential GDP were to become more strongly cor- related; that is, suppose that an increase or decrease in the GDP gap causes an enlarged increase or decrease, respectively, in government spending.

A) The aggregate demand curve should become steeper because monetary policy is less effective.
B) The aggregate demand curve should become steeper because monetary policy is more effective.
C) The aggregate demand curve should become flatter because monetary policy is more effective.
D) The aggregate demand curve should become flatter because monetary policy is less effective.
E) There should be no change in the slope of the aggregate demand curve.