Combined rightward shifts in AD and AS Steps:

• Increase in welfare payments boosts disposable income and consumption, shifting AD right.
• Improved industrial training raises labor productivity, shifting short-run AS right.
• Rightward AD shift alone raises price level and output; rightward AS shift alone lowers price level and raises output.
• Combined, equilibrium output rises with ambiguous price level effect, typically lower prices if AS shift dominates.

Why C is correct:

• C shows higher output and lower price level, matching the combined expansionary effects per the AD-AS model where AS shift offsets AD's inflationary pressure.

Why the others are wrong:

• A: Ignores AS shift, overstates price increase from AD alone.
• B: Assumes only AD shift, missing productivity boost to AS.
• D: Predicts contraction, contradicting both policy expansions.

Final answer: C