Refer to the information provided in Figure 18.1 below to answer the questions that follow. Figure 18.1 -Refer to Figure 18.1.According to Keynes,an increase in government spending or an increase in money supply will A)shift AS₁ to the right. B)shift LRAS to the right. C)shift AD₁ to the right. D)shift AD₁ to the left.

Question

Quizplus · Accepted Answer

According to Keynes, an increase in government spending or an increase in money supply will shift the Aggregate Demand curve (ADS1U1B11S1U1B0) to the right. This is shown in Figure 18.1, where an increase in government spending shifts the curve from ADS1U1B0 to ADS1U1B1, and an increase in money supply shifts the curve from ADS1U1B0 to ADS1U1B2. Therefore, the correct choice is C.

Refer to the Information Provided in Figure 18