Aggregate demand and aggregate supply schedules for a hypothetical economy
Amount of Amount of
Real GDP Read GDP
Demanded, Price Level Supplied,
Billions (Price index) Billions
$100 300 $450
200 250 400
300 200 300
400 150 200
500 100 100
(a) Use the data above to graph the aggregate demand and aggregate supply curves. What is the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output?
(b) If the price level in this economy is 150, will quantity demanded equal, exceed, or fall short of quantity supplied? By what amount? If the price level is 250, will quantity demanded equal, exceed, or fall short of quantity supplied? By what amount?
(c) Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in the new aggregate demand curve as AD1. What is the new equilibrium price level and level of real output?