Which of the following would be the theoretical outcome of expansionary fiscal policy in the following aggregate demand-aggregate supply model (where LRAS - long-run aggregate supply and GDP gross domestic product)?
Price
level
(P)
LRAS
SRAS,
SRAS
100
95
90
AD,
AD
Real GDP
Y, Y
uy ư c =ư
O a. The aggregate demand (AD) curve would shift from AD, to AD2.
Ob. The AD curve would shift from AD2 to AD.
O c The AD curve would shift from AD, to AD2 at the same time that the SRAS curve would shift from SRAS, to SRAS2.
Od. The short-run aggregate supply (SRAS) curve would shift from SRASą to SRAS.
Oe. The SRAS curve would shift from SRAS, to SRAS 2.