Figure 16-12
-Refer to Figure 16-12.An increase in government purchases of $200 billion causes aggregate demand to shift ultimately from AD₁ to AD₂.Assuming a constant price level,the difference in real GDP between point A and point B will be ________ $200 billion.

Question

Figure 16-12 Figure 16-12 -Refer to Figure 16-12.An increase in government purchases of $200 billion causes aggregate demand to shift ultimately from AD<sub>1</sub> to AD<sub>2</sub>.Assuming a constant price level,the difference in real GDP between point A and point B will be ________ $200 billion. A) equal to B) less than C) greater than D) There is insufficient information given here to draw a conclusion.

Figure 16-12 -Refer to Figure 16-12.An increase in government purchases of $200 billion causes aggregate demand to shift ultimately from AD<sub>1</sub> to AD<sub>2</sub>.Assuming a constant price level,the difference in real GDP between point A and point B will be ________ $200 billion. A) equal to B) less than C) greater than D) There is insufficient information given here to draw a conclusion.

-Refer to Figure 16-12.An increase in government purchases of $200 billion causes aggregate demand to shift ultimately from AD₁ to AD₂.Assuming a constant price level,the difference in real GDP between point A and point B will be ________ $200 billion.

Quizplus · Accepted Answer

An increase in government purchases causes an increase in aggregate demand and, assuming a constant price level, a movement along the aggregate demand curve. As a result, the difference in real GDP between point A and point B will be greater than $200 billion. The exact amount depends on the slope of the aggregate supply curve.

Figure 16-12 -Refer to Figure 16-12.An Increase in Government Purchases of $200