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Draw the aggregate demand and short-run aggregate supply curves. What is the initial real GDP? What is the initial price level? What kind of gap, if any, exists?

Draw the aggregate demand and short-run aggregate supply curves. What is the initial real GDP? What is the initial price level? What kind of gap, if any, exists?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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2. Suppose an economy is described by the following aggregate demand and short-run aggregate supply curves. The potential level of output is $10 trillion. Aggregate Quantity of Goods and Services Price Level Demanded Supplied 3.0 $11.0 trillion $9.0 trillion 3.4 $10.8 trillion $9.2 trillion 3.8 $10.6 trillion $9.4 trillion 4.2 $10.4 trillion $9.6 trillion 4.6 $10.2 trillion $9.8 trillion 5.0 $10.0 trillion $10.0 trillion 5.4 $9.8 trillion $10.2 trillion 5.8 $9.6 trillion $10.4 trillion 6.2 $9.4 trillion $10.6 trillion 6.6 $9.2 trillion $10.8 trillion 7.0 $9.0 trillion $11.0 trillion Draw the aggregate demand and short-run aggregate supply curves. What is the initial real GDP? What is the initial price level? What kind of gap, if any, exists? After the increase in health-care costs, each level of real GDP requires an increase in the price level of o.8. For example, producing $9.0 trillion worth of goods and services now requires a price level of 3.8. What is the short- run equilibrium level of real GDP? After the health-care cost increase, what is the new equilibrium price level in the short run? What sort of gap, if any, now exists?
Transcribed Image Text:2. Suppose an economy is described by the following aggregate demand and short-run aggregate supply curves. The potential level of output is $10 trillion. Aggregate Quantity of Goods and Services Price Level Demanded Supplied 3.0 $11.0 trillion $9.0 trillion 3.4 $10.8 trillion $9.2 trillion 3.8 $10.6 trillion $9.4 trillion 4.2 $10.4 trillion $9.6 trillion 4.6 $10.2 trillion $9.8 trillion 5.0 $10.0 trillion $10.0 trillion 5.4 $9.8 trillion $10.2 trillion 5.8 $9.6 trillion $10.4 trillion 6.2 $9.4 trillion $10.6 trillion 6.6 $9.2 trillion $10.8 trillion 7.0 $9.0 trillion $11.0 trillion Draw the aggregate demand and short-run aggregate supply curves. What is the initial real GDP? What is the initial price level? What kind of gap, if any, exists? After the increase in health-care costs, each level of real GDP requires an increase in the price level of o.8. For example, producing $9.0 trillion worth of goods and services now requires a price level of 3.8. What is the short- run equilibrium level of real GDP? After the health-care cost increase, what is the new equilibrium price level in the short run? What sort of gap, if any, now exists?
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