-In the above figure, if initial equilibrium is at point A and there is a fully anticipated increase in aggregate demand from AD₁ to AD₂ due to an anticipated increase in the money supply, then
A) the economy will move directly from point A to point C without passing through point B.
B) the economy will move directly from point A to point B, and will remain at point B in the long run.
C) the price level will shift to P₂ in the short run.
D) the price level will shift to P₂ in the long run.
Correct Answer:
Verified
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