Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn

Exercise 12

ADVANCED ANALYSIS Suppose that the equation for a particular short-run AS curve is P = 20 +.5 Q , where P is the price level and Q is real output in dollar terms. What is Q if the price level is 120? Suppose that the Q in your answer is the full-employment level of output. By how much will Q increase in the short run if the price level unexpectedly rises from 120 to 132? By how much will Q increase in the long-run due to the price level increase? LO1