Refer to the following graph. If the economy is at full employment real GDP, exp

Question

Refer to the following graph. If the economy is at full employment real GDP, expansionary fiscal policy, which increases aggregate demand from AD0 to AD1, will result in the new short-run equilibrium:

A.E2 and RGDP1

B. E2 and RGDPnr

C. E1 and RGDP1

D. E0 and RGDPnr

Refer to the following graph. The expansionary fiscal policy- which increases aggregate demand from AD0 to AD1 - will result in the new long-run equilibrium:

A.E2 and RGDP1

B. E2 and RGDPnr

C. E1 and RGDP1

D. E0 and RGDPnr

A.E2 and RGDP1

B. E2 and RGDPnr

C. E1 and RGDP1

D. E0 and RGDPnr

Explanation / Answer

No diagram is attached in both attachment.Still I had tried to answer.

Ans-

C. E1 and RGDP1

Ans- B. E2 and RGDPnr

C. E1 and RGDP1

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