Questions 3 and 4 3. Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table. LO7.3Page 169Amount ofAmouReal GDPRealDemanded,Price LevelSuppliedBillions(Price Index)Billions$100300$450200250400300200300400150200500100100a. 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 thishypothetical 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 quantitydemanded 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 equilibriumprice level and level of real output?4. Suppose that the following table shows an economy's relationship between real output and the inputs needed to produce that output: LO7.3Input QuantityReal GDP150.0$400112.530075.0200a. What is productivity in this economy?b. What is the per-unit cost of production if the price of each input unit is $2?c. Assume that the input price increases from $2 to $3 with no accompanying change in productivity. What is the new per-unit cost of production? In what direction wouldthe $1 increase in input price push the economy's aggregate supply curve? What effect would this shift of aggregate supply have on the price level and the level of realoutput?d. Suppose that the increase in input price does not occur but, instead, that productivity increases by 100 percent. What would be the new per-unit cost of production? Whateffect would this change in per-unit production cost have on the economy's aggregate supply curve? What effect would this shift of aggregate supply have on the pricelevel and the level of real output?

Aggregate demand is the total demand for goods and services in an economy at the given price level.…

3. Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table. LO7.3 Page 169 Amou Real Supplied Billions Amount of Real GDP Price Level Demanded, Billions (Price Index) $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?

3. Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table. LO7.3 Page 169 Amou Real Supplied Billions Amount of Real GDP Price Level Demanded, Billions (Price Index) $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?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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