Use the following graph to answer the next question.
Suppose an economy's full employment output is at the level Q1, and the economy's current aggregate demand is represented by AD2. If the government swiftly implements contractionary fiscal policy that immediately shifts the economy's aggregate demand to AD1, the short-to-medium term aggregate demand would be most closely represented by
A. AD0.
B. AD1.
C. AD2.
D. AD3.
Answer: A
Economics
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