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(Figure: Fiscal Policy II) Use Figure: Fiscal Policy II. Suppose that this economy is in equilibrium at E1. If there is an increase in government purchases, will shift to the , causing a(n) in the price level and a(n) in real GDP. AD2; left; increase; decrease AD2; left; decrease; decrease AD1; right; increase; increase AD1; right; decrease; increase.

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(Figure: Fiscal Policy II) Use Figure: Fiscal Policy II. Suppose that this economy is in equilibrium at E1. If there is an increase in government purchases, will shift to the , causing a(n) in the price level and a(n) in real GDP. AD2; left; increase; decrease AD2; left; decrease; decrease AD1; right; increase; increase AD1; right; decrease; increase

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