Suppose that the aggregate demand and aggregate supply schedules for hypothetical economy are shown at the top left of the next page.
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 the quantity demanded be equal, exceed, or fall short of the quantity supplied? By what amount? If the price level is 250 will the quantity demanded equal, exceed, or fall short of the quantity supplied? By what amount?
c. Suppose that buyers desire to purchase $200 billion of extra real output at each level. Sketch in the new Aggregate demand curve as AD1. What is the new equilibrium price level and level of real output?