According to Figure 11.2,a shift from AD₁ to AD₂ will

Question

Quizplus · Accepted Answer

The shift from AD₁ to AD₂ will result in an increase in the price level, which will move the equilibrium point to Y, as shown in Figure 11.2. This is because the aggregate demand curve shifts to the right, intersecting with the short-run aggregate supply curve at a higher price level and higher real GDP. There is no information provided to suggest that the shift will eliminate the GDP gap (B) or move the economy to point Z (D). The answer (A) is incorrect because the equilibrium point will move to Y, not Q_F.