-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (1)and blank (2),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?
A) rises; rises
B) falls; falls
C) rises; falls
D) falls; rises

Question

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (1)and blank (2),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?
A) rises; rises 
B) falls; falls 
C) rises; falls 
D) falls; rises

Quizplus · Accepted Answer

The increase in government spending will shift the aggregate demand curve to the right, leading to an increase in both output and the price level.