Use the following diagram to answer the following questions.

-Refer to Diagram 13-1. Suppose the economy is currently in equilibrium at point A. If government increases spending, this would most likely:
A) shift aggregate demand from AD₁ to AD₂.
B) shift aggregate demand from AD₁ to AD3.
C) cause unemployment.
D) cause the equilibrium level of real GDP and the equilibrium price level to fall.
Correct Answer:
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