Use the following to answer questions: Figure: The Multiplier -(Figure: The Multiplier) Refer to Figure: The Multiplier. If this economy is at Y₁ and the price level decreases: A) AD₁will shift to the left, reflecting a multiplied decrease in real GDP at every price level. B) AD₁ will shift to the right, reflecting a multiplied increase in real GDP at every price level. C) an upward movement along the AD₁ will take place, reflecting an increase in the price level. D) a downward movement along the AD₁ will take place, reflecting a decrease in the price level.

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A decrease in the price level would cause a movement down along the aggregate demand curve, from point U1 to U2. This would increase both real GDP and the price level, resulting in a new equilibrium at point S2.

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