Final answer:
A rightward shift in AD in the AD/AS model results in a higher equilibrium quantity and a higher price level, while a leftward shift leads to a lower equilibrium quantity and a lower price level. Hence the correct answer is option a and b.
Step-by-step explanation:
The AD/AS model in economics represents the aggregate demand (AD) and aggregate supply (AS) in an economy. When AD shifts to the right, it indicates an increase in the total demand for goods and services at every price level. This rightward shift in AD would typically result in a higher equilibrium quantity and a higher price level, matching option (a) Higher quantity, higher price level. Conversely, when AD shifts to the left, it suggests a decrease in aggregate demand, leading to a lower equilibrium quantity and a lower price level, aligning with option (b) Lower quantity, lower price level.
A leftward shift in AD might result from factors such as decreased consumer confidence, reduced government spending, or increased taxes, which can diminish spending and investment. On the other hand, factors such as lower interest rates, increased consumer wealth, or reduced taxes could boost spending and investment, causing AD to shift to the right.