Refer to Figure 11.3.Assume aggregate demand is represented by AD₁ and full-employment output is $5.6 trillion.If aggregate demand decreases by the amount of the GDP gap,equilibrium will occur at

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The question states that aggregate demand decreases by the amount of the GDP gap. This would shift the aggregate demand curve to the left, and a new equilibrium point would be reached where the new aggregate demand curve (AD₂) intersects with the AS curve. This happens at point c, so the correct answer is C.