The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. Real domestic output demanded (in billions) Price level Real domestic output supplied (in billions)$500 350 $3000$1000 300 $3000$1500 250 $2500$2000 200 $2000$2500 150 $1500$3000 150 $1000Refer to the above table. If the quantity of real domestic output demanded decreased by $500 and the quantity of real domestic output supplied increased by $500 at each price level, the new equilibrium price level and quantity of real domestic output would be:
Question
The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. Real domestic output demanded (in billions) Price level Real domestic output supplied (in billions)300030002500200015001000Refer to the above table. If the quantity of real domestic output demanded decreased by 500 at each price level, the new equilibrium price level and quantity of real domestic output would be:
Solution
To find the new equilibrium price level and quantity of real domestic output, we need to find the point where the quantity of real domestic output demanded equals the quantity of real domestic output supplied.
Given that the quantity of real domestic output demanded decreased by 500 at each price level, we need to adjust the values in the table accordingly.
After adjusting, the table would look like this:
Real domestic output demanded (in billions) Price level Real domestic output supplied (in billions) 3500 3500 3000 2500 2000 1500 1500
From the adjusted table, we can see that the new equilibrium price level and quantity of real domestic output is where the quantity demanded equals the quantity supplied. This occurs at a price level of 200 and a real domestic output of $1500 billion.
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100 4 16110 10 15140 14 12200 15 6Instructions: Use the tools provided 'AS' and 'AD' to plot the aggregate supply and aggregate demand curves (plot 4 points total for each curve).Instructions: Enter your responses as a whole number.Using the information in the table and graph, answer the following questions.What is the equilibrium price level?What is the equilibrium output?$ trillion in real GDP.If the quantity of output demanded at every price level increases by $2 trillion, what happens to equilibrium output and prices?Output .Prices .Graph your answer to part c.Instructions: Use the tool provided 'AD1' to draw the new aggregate demand curve (plot 4 points total). PrevQuestion 8 of 12 Total8 of 12Visit question mapNext
Using the information in the table and graph, answer the following questions.What is the equilibrium price level?What is the equilibrium output?$ trillion in real GDP.If the quantity of output demanded at every price level increases by $2 trillion, what happens to equilibrium output and prices?Output .Prices .
How do shifts in aggregate demand and aggregate supply affect the economy's output and price level in the short run and the long run?
The equilibrium level of real GDP is found at the intersection of the aggregate schedule and the equilibrium line.
Assume that the potential GDP of the economy of Arion is $1,120, and that the aggregate demand and aggregate supply are as shown in the following table. Aggregate Quantity Demanded 1 Aggregate Quantity Demanded 2 Price Index Aggregate Quantity Supplied$1,200 96 $1,0401,180 97 1,0601,160 98 1,0801,140 99 1,1001,120 100 1,1201,100 101 1,1401,080 102 1,1601,060 103 1,1801,040 104 1,2001,020 105 1,220a. The value of equilibrium real GDP is and the price level is . There is gap. The gap is equal to $ .b. If firms become more optimistic and aggregate demand increases by $40, complete the aggregate demand 2 column in the table above. c. The new value of equilibrium real GDP is and the price level is now .d. There is gap. The gap is equal to $ .
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