Figure 2 Long-run Aggregate Supply Short-run PRICE LEVEL Aggregate Supply Aggregate Demand REAL GROSS DOMESTIC PRODUCT 10. Which of the following summarizes the Classical ("laissez faire") theory for how policymakers should address the situation the economy is facing in Figure 2 above? The economy should be left to 'self-correct' allowing LRAS to shift right and create a new long-run equilibrium at B b. The government should use expansionary fiscal policy, causing AD to shift right and create a new short-run equilibrium at point D c. The economy should be left to 'self-correct', allowing SRAS to shift right and create a new short-run equilibrium at point E d. The government should use contractionary fiscal policy, causing AD to shift left and restore the economy to long-run equilibrium at point A e. The economy should be left to 'self-correct', allowing SRAS to shift left and create a new long-run equilibrium at point C 11. Which of the following summarizes the appropriate prescription, according to Keynesian ("interventionist") economic theory, for addressing the situation the economy is facing in Figure 2 above? a. The economy should be left to 'self-correct' allowing LRAS to shift right and create a new long-run equilibrium at B b. The government should use expansionary fiscal policy, causing AD to shift right and create a new short-run equilibrium at point D c. The economy should be left to 'self-correct', allowing SRAS to shift right and create a new short-run equilibrium at point E d. The government should use contractionary fiscal policy, causing AD to shift left and restore the economy to long-run equilibrium at point A