Essay
In the table below are aggregate demand and aggregate supply schedules. 
(a) Suppose in Year 1, aggregate demand is shown in columns (1) and (2) in the above table and short-run aggregate supply is shown in columns (1) and (4) in the above table.What will be the equilibrium level of real GDP and the equilibrium price level?
(b) Suppose in Year 2, aggregate demand changes and is now shown in columns (1) and (3).What will be the new equilibrium level of real GDP and the new equilibrium price level?
(c) Suppose in Year 3, aggregate demand changes and is now shown again in columns (1) and (2).What will be the new level of real GDP and the new price level if prices and wages are completely flexible downward?
(d) Suppose in Year 3, aggregate demand changes and is now shown again in columns (1) and (2).What will be the new level of real GDP and the new price level if prices and wages are completely inflexible downward?
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(a) Real GDP will be $1,700 and the pric...View Answer
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