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 110 be the equilibrium price level? Why won't a price level of 130 index be the equilibrium price level?
(c)Suppose aggregate demand increases by $400 billion at each price level.What will be the new equilibrium price and output levels?
(d)What factors might cause aggregate demand to increase?
Correct Answer:
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(a)The equilibrium real GDP is $800 bil...View Answer
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Correct Answer:
Verified
(a)The equilibrium real GDP is $800 bil...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
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