AGGREGATE DEMAND / AGGREGATE SUPPLY P K Equilibrium Price Level Real Output AD Real Domestic Output, GOP Assume this graph reflects the condition of an economy BEFORE anything happens. Later, an oil supply shock occurs, and in response, the government applies a fiscal stimulus to the economy (such as increasing transfer payments or cutting taxes). What would happen after the fiscal stimulus is applied? (Hint: First, determine which curve (if any) will be impacted by the oil supply shock. Next, determine which curve (if any) will be impacted by the fiscal stimulus.) O a) Real output and the price level would both rise. O b) The price level would rise. O' c) The price level and unemployment would both rise. O'd) The price level and real output would both fall.What will prevent interest rates from falling lower as the money supply expands? O a) the public's indifference to holding money in non-interest bearing formats. Ob) the public's desire to hold a limitless amount of money as M1 money. O c) a perfectly elastic M1 money demand curve. O'd) entering the liquidity trap. O e) All of the above are correct