Essay
Suppose the aggregate demand and short-run aggregate supply schedules for a hypothetical economy are as shown below:
(a) What will be the equilibrium price and real output level in this hypothetical economy? Is this level of real GDP also the full-employment level of output? Explain.(b) Why won't a price level of 100 be the equilibrium price level? Why won't a price level of 110 index be the equilibrium price level?
(c) Suppose aggregate demand increases by $120 billion at each price level.What will be the new equilibrium price and output levels?
(d) What factors might cause aggregate demand to increase?
(e) Suppose short-run aggregate supply increases by $120 billion at each price level.What will be the new equilibrium price and output levels?
Correct Answer:
Verified
(a) The equilibrium real GDP is $180 bil...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q2: Using the aggregate demand-aggregate supply (short-run) model,
Q2: Explain the relationship between the aggregate expenditures
Q8: Economists think of three different aggregate supply
Q9: Why does aggregate demand shift outward by
Q11: What is the aggregate demand curve? What
Q12: What is the effect on the multiplier
Q24: The determinants of aggregate demand "determine" the
Q25: What determines the equilibrium price level and
Q26: Using the aggregate demand-aggregate supply (short-run) model,
Q32: How can an economy already at full-employment