6 8 10 12 14 16 106 104 102 100 98 96 PRICE LEVEL REAL GDP (Trillions of dollars) NRGDP SRAS AD 1 AD 3 AD 2 AD 2 The initial short-run equilibrium level of real GDP is$12 trillion , and the initial short-run equilibrium price level is102 . Suppose the government, seeking full employment, borrows money and increases its expenditures by the amount it believes necessary to close the output gap. According to Keynesian economists, which curve in the previous graph will most likely be the new aggregate demand curve? AD2 AD1 AD3 As a result, the equilibrium level of real GDP will be , and the equilibrium price level will be . According to Keynesian economists, which of the following is true in this case? The increase in deficit-financed government spending causes real GDP to increase, but not to natural real GDP. The increase in deficit-financed government spending causes real GDP to increase to natural real GDP. The increase in deficit-financed government spending has no impact on real GDP or the price level. Real GDP does not increase; only the price level increases. This is an example of