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Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point U. The AE = Y price level is P0. Now, suppose there is an exogenous rise in 2 the price level to P1. Which of the following statements x- 'RED describes the likely macroeconomic effects? __ x " AE1 O A. The AE curve shifts to AEz. a new equilibrium is established at point W. and the AD curve shifts from AD0 to AD1, and equilibrium moves from point D to point A. Desired Aggregate Expenditure \\ O B. The AE curve shifts to AEZ. a new equilibrium is established at point W. and the economy moves from point D to point E along ADO. O C. The AE curve shifts to AE1 . a new equilibrium is established at point V. and the economy moves from point D to point C along ADO. O D. The AE curve shifts to AE1 . a new equilibrium is established at point V. and the AD curve shifts from AD0 to AD1. and equilibrium from point D to point A. Price Level