4. Suppose the aggregate demand and supply schedules for a hypothetical economy are as shown below. Amount of real domestic output demanded, billions $ 200 400 600 800 1000 Price level (price index) 300 250 200 150 100 Amount real domestic output supplied, billions $800 800 600 400 200 of A, What will be the equilibrium price and output level in this hypothetical economy? B. Why won't the 150 index be the equilibrium price level? Why won't the 250 index be the equilibrium price level? C. Suppose demand increases by $400 billion at each price level. What will be the new equilibrium price and output levels? D. What factors might cause a change in aggregate demand?

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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4. Suppose the aggregate demand and supply schedules for a hypothetical economy are
as shown below.
Amount of real
domestic
output
demanded,
billions
$ 200
400
600
800
1000
Price level
(price
index)
300
250
200
150
100
Amount
of
real domestic
output
supplied,
billions
$800
800
600
400
200
A, What will be the equilibrium price and output level in this hypothetical economy?
B. Why won't the 150 index be the equilibrium price level? Why won't the 250 index be the
equilibrium price level?
C. Suppose demand increases by $400 billion at each price level. What will be the new
equilibrium price and output levels?
D. What factors might cause a change in aggregate demand?
Transcribed Image Text:4. Suppose the aggregate demand and supply schedules for a hypothetical economy are as shown below. Amount of real domestic output demanded, billions $ 200 400 600 800 1000 Price level (price index) 300 250 200 150 100 Amount of real domestic output supplied, billions $800 800 600 400 200 A, What will be the equilibrium price and output level in this hypothetical economy? B. Why won't the 150 index be the equilibrium price level? Why won't the 250 index be the equilibrium price level? C. Suppose demand increases by $400 billion at each price level. What will be the new equilibrium price and output levels? D. What factors might cause a change in aggregate demand?
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