Asked by Ranjit Dhatt on Jun 20, 2024
Verified
Consider schedule #1 in the aggregate demand and aggregate supply table given below.The equilibrium output and price level for the economy described on this schedule are:
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Table 10.1
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Quantity of Aggregate Output Demanded Price Level #1 Quantity of Aggregate Output Supplied #2#3$7.0110$5.0$6.0$4.06.51205.56.54.56.01306.07.05.05.51406.57.55.55.01507.08.06.0\begin{array} { c c c c c } \begin{array} { c } \text { Quantity of } \\\text { Aggregate Output } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Price } \\\text { Level }\end{array} &\#1& \begin{array} { c } \text { Quantity of } \\\text { Aggregate Output Supplied } \\\# 2\end{array} & \# 3 \\\hline \$ 7.0 & 110 & \$ 5.0 & \$ 6.0 & \$ 4.0 \\6.5 & 120 & 5.5 & 6.5 & 4.5 \\6.0 & 130 & 6.0 & 7.0 & 5.0 \\5.5 & 140 & 6.5 & 7.5 & 5.5 \\5.0 & 150 & 7.0 & 8.0 & 6.0\end{array} Quantity of Aggregate Output Demanded $7.06.56.05.55.0 Price Level 110120130140150#1$5.05.56.06.57.0 Quantity of Aggregate Output Supplied #2$6.06.57.07.58.0#3$4.04.55.05.56.0
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A) $7.0 and 110,respectively.
B) $6.5 and 120,respectively.
C) $6.0 and 130,respectively.
D) $5.5 and 140,respectively.
E) $5.0 and 150,respectively.
Aggregate Demand
The sum of all demand for products and services in an economy, indicating the total spending on goods and services at each price level.
Equilibrium Output
The level of output at which the quantity of goods produced equals the quantity of goods consumed in an economy, with no external pressures to change.
- Analyze equilibrium conditions in the aggregate demand and aggregate supply model.
Verified Answer
WE
wanyonyi edwineJun 22, 2024
Final Answer :
C
Explanation :
The equilibrium output and price level are found where the quantity of aggregate output demanded equals the quantity of aggregate output supplied. In schedule #1, this occurs at a price level of 130 with an aggregate output of $6.0.
Learning Objectives
- Analyze equilibrium conditions in the aggregate demand and aggregate supply model.
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