o o o PRICE LEVEL PRICE LEVEL PRICE LEVEL PRICE LEVEL Soluti

o o o PRICE LEVEL PRICE LEVEL PRICE LEVEL PRICE LEVEL

Solution

The military spending will decrease both the aggregate supply and aggregate demand in the economy. So both the AD and the AS curve would shift to the left. The war is economically unproductive and activity and it does not have any multilier effect in the economy. The war will sucks out the nation\'s resources and and it will cause a decline in the productivity of the economy.

ANS. (A), (C)