Economics 13th Edition by James Gwartney, Richard Stroup, Russell Sobel, David Macpherson

Exercise 15

Consider an economy with the following aggregate demand ( AD ) and short-run aggregate supply ( SRAS ) schedules. Decision-makers have previously made decisions anticipating that the price level during the current period will be P 105.
a. Indicate the quantity of GDP that will be produced during the period.
b. Is it a long-run equilibrium level of GDP? Why or why not?
c. How will the unemployment rate during the current period compare with the natural rate of unemployment?
d. Will the current rate of GDP be sustainable into the future? Why or why not?