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-(Figure: Classical Versus Keynesian Macroeconomics) Refer to Figure: Classical Versus Keynesian Macroeconomics. According to the Keynesian view, if this economy shifts from AD₁ to AD₂ because of a large decline in investment spending by businesses, the price level will _____, and real GDP will _____.

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-(Figure: Classical Versus Keynesian Macroeconomics) Refer to Figure: Classical Versus Keynesian Macroeconomics. According to the Keynesian view, if this economy shifts from AD₁ to AD₂ because of a large decline in investment spending by businesses, the price level will _____, and real GDP will _____.

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According to the Keynesian view, a decline in investment spending by businesses will lead to a decrease in aggregate demand (shift from AD₁ to AD₂). This will result in a decrease in both price level and real GDP, as shown by the movement from point A to point B on the Keynesian AD curve. Therefore, the correct answer is D, decrease in price level and real GDP.

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