A government intends to raise expenditure on education and training each year. Which diagram is most likely to show how this rise will affect the economy’s long-run output and price level?
- AAD shifts right from AD1 to AD2 with LRAS1 unchanged (higher price level, same LRAS output)
- B[IMAGE:9708_w16_qp_12_p8_diagram_3]
- C[IMAGE:9708_w16_qp_12_p8_diagram_2]
- D[IMAGE:9708_w16_qp_12_p8_diagram_1]