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-(Figure: Classical versus Keynesian Macroeconomics) Refer to Figure: Classical versus Keynesian Macroeconomics.According to the Keynesian view,if this economy shifts from AD₁ to AD₂ because of a large decline in investment spending by businesses,the price level will _____,and real GDP will _____.

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-(Figure: Classical versus Keynesian Macroeconomics) Refer to Figure: Classical versus Keynesian Macroeconomics.According to the Keynesian view,if this economy shifts from AD₁ to AD₂ because of a large decline in investment spending by businesses,the price level will _____,and real GDP will _____.

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In the Keynesian view, a decrease in investment spending leads to a decrease in aggregate demand (as shown by the shift from ADS1U1B11S1U1B0 to ADS1U1B12S1U1B0). This leads to a decrease in both price level and real GDP (movement from point A to point B along the new aggregate supply curve S1U1B0). Therefore, the correct choice is D, decrease in price level and real GDP.

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