Asked by Stephine Browning on May 21, 2024
Verified
The following table shows an aggregate demand schedule and an aggregate supply schedule.Which of the following is true?
Table 5.1
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Aggregate Demand (quantity demanded in billions of dollars) Price Level ($) Aggregate Supply (quantity supplied in billions of doll ars) 1001501,2002001251,00040010080060075600800504001,00025200\begin{array} { | c | c | c | } \hline \begin{array} { l } \text { Aggregate Demand (quantity } \\\text { demanded in billions of } \\\text { dollars) }\end{array} & \begin{array} { l } \text { Price Level } \\\text { (\$) }\end{array} & \begin{array} { l } \text { Aggregate Supply (quantity supplied in } \\\text { billions of doll ars) }\end{array} \\\hline 100 & 150 & 1,200 \\\hline 200 & 125 & 1,000 \\\hline 400 & 100 & 800 \\\hline 600 & 75 & 600 \\\hline 800 & 50 & 400 \\\hline 1,000 & 25 & 200 \\\hline\end{array} Aggregate Demand (quantity demanded in billions of dollars) 1002004006008001,000 Price Level ($) 150125100755025 Aggregate Supply (quantity supplied in billions of doll ars) 1,2001,000800600400200
A) Equilibrium output is $1,000,and equilibrium price level is 25.
B) Equilibrium output is $800,and equilibrium price level is 50.
C) Equilibrium output is $200,and equilibrium price level is 125.
D) Equilibrium output is $400,and equilibrium price level is 25.
E) Equilibrium output is $600,and equilibrium price level is 75.
Aggregate Demand
The relationship between the economy’s price level and aggregate output demanded, with other things constant.
Equilibrium Output
The level of output at which the quantity of goods produced equals the quantity of goods demanded.
- Learn about the state of macroeconomic equilibrium and its significance for real GDP and the price level.
Verified Answer
VS
Vishal SattaMay 24, 2024
Final Answer :
E
Explanation :
Equilibrium occurs where the quantity demanded equals the quantity supplied. At a price level of 75, both the aggregate demand and aggregate supply are 600 billion dollars, indicating equilibrium.
Learning Objectives
- Learn about the state of macroeconomic equilibrium and its significance for real GDP and the price level.
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