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-(Figure: Classical versus Keynesian Macroeconomics) Refer to Figure: Classical versus Keynesian Macroeconomics.According to the classical view,if this economy shifts from AD₂ to AD₁,perhaps because of a large increase in government spending,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 classical view,if this economy shifts from AD₂ to AD₁,perhaps because of a large increase in government spending,the price level will _____ and real GDP will _____.

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According to the classical view, an increase in aggregate demand (AD) leads to a rise in the price level, but real GDP remains unchanged in the long run due to the economy operating at full employment.

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