Figure 5-2
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In Figure 5-2, an increase in government spending would cause
A. an outward shift in the aggregate supply curve and an increase in the price level.
B. an outward shift in the aggregate demand curve and an increase in the price level.
C. an inward shift of the aggregate demand curve and an increase in the price level.
D. an inward shift of the aggregate demand curve and a decrease in the price level.
Answer: B
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