2. EquilibriumThe following table shows the real output demanded and supplied at various price levels in a hypothetical economy.Real Output DemandedPrice LevelReal Output Supplied (Billions of dollars)(Billions of dollars)(Index number)(Billions of dollars)5080400756035012540275175301753502050On the following graph, use the blue points (circle symbols) to plot the aggregate demand (Initial AD) curve for the economy. Then use the orangepoints (square symbols) to plot the short-run aggregate supply (SRAS) curve for the economy.Note: Line segments will automatically connect the points.100Initial AD80 Note: Line segments will automatically connect the points.100Initial AD8060SRAS40New AD20100200300400500REAL GDP (Index numbers)The equilibrium price level is ▼, and the equilibrium level of real output isSuppose that the government spending increases by $25 billion and the expenditure multiplier in this economy is 6.On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregatedemand (New AD) curve.The change in government spendingv the equilibrium level of real output byPRICE LEVEL (Billions of dollars)

The aggregate demand-aggregate supply model is a macroeconomic model based on the Keynesian school…

The equilibrium price level is , and the equilibrium level of real output is Suppose that the government spending increases by $25 billion and the expenditure multiplier in this economy is 6. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. The change in government spending the equilibrium level of real output by

The equilibrium price level is , and the equilibrium level of real output is Suppose that the government spending increases by $25 billion and the expenditure multiplier in this economy is 6. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. The change in government spending the equilibrium level of real output by

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 42CTQ: On a microeconomic demand curve, a decrease in price causes an increase in quantity demanded because...

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Table 24.4 describes Santhers economy. Plot the AD/AS curves and identify the equilibrium. Would you expect unemployment in this economy to be relatively high or low? Would you expect prices to be a relatively large or small concern for this economy? Imagine that input prices fall and so AS shifts to the right by 150 units. Identify the new equilibrium. How will the shift in AS affect the original output, price level, and employment?
Price Level Aggregate Supply Aggregate Demand 90 3,000 3,500 95 3,000 3,000 100 3,000 2,500 105 3,000 2,200 110 3,000 2,100 Table 1. Sketch an aggregate supply and aggregate demand diagram. What is the equilibrium output and price level? If aggregate demand shifts right, what is equilibrium output? If aggregate demand shifts left, what is equilibrium output? In this scenario, would you suggest using aggregate demand to alter the level of output or to control any inflationary increases in the price level?
Refer to the table below. Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 Instructions: Enter your anwers as whole numbers. A). What is the equilibrium level of output? What is the equilibrium price level? B). Suppose that aggregate demand increases such that the amount of real output demanded rises by $ 7 billion at each price level. Insert the new values for real output demanded in the table below. Real Output Demanded, Billions New Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 What is the new equilibrium level of output? What is the new equilibrium price level? By what percentage will the price level increase? Will this inflation be demand-pull inflation or will it be cost-push inflation? C) If potential real GDP ( that is, full-employment GDP) is $ 510…