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In 2003, the economy of Microtania had an aggregate demand and aggregate supply according to the following schedule: Price level_Aggregate Demand Short-Run Aggregate Supply Long-Run Aggregate Supply 90 $1125.00 $1320.00 100 $1320.00 110 $1320.00 120 $1320.00 130 $1320.00 140 $1320.00 150 $1320.00 $1575.00 $1500.00 $1425.00 $1350.00 $1275.00 $1200.00 $1125.00 $1200.00 $1275.00 $1350.00 $1425.00 $1500.00 $1575.00

In 2003, the economy of Microtania had an aggregate demand and aggregate supply according to the following schedule: Price level_Aggregate Demand Short-Run Aggregate Supply Long-Run Aggregate Supply 90 $1125.00 $1320.00 100 $1320.00 110 $1320.00 120 $1320.00 130 $1320.00 140 $1320.00 150 $1320.00 $1575.00 $1500.00 $1425.00 $1350.00 $1275.00 $1200.00 $1125.00 $1200.00 $1275.00 $1350.00 $1425.00 $1500.00 $1575.00

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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In 2003, the economy of Microtania had an aggregate demand and aggregate supply according to the following schedule: Price level Aggregate Demand Short-Run Aggregate Supply Long-Run Aggregate Supply 90 $1125.00 $1320.00 100 $1200.00 $1320.00 110 $1275.00 $1320.00 120 $1350.00 $1320.00 130 $1425.00 $1320.00 140 $1500.00 $1320.00 150 $1575.00 $1320.00 $1575.00 $1500.00 $1425.00 $1350.00 $1275.00 $1200.00 $1125.00 What was Microtania's short-run equilibrium output 2003? $| Calculate Microtania's output gap: $
Transcribed Image Text:In 2003, the economy of Microtania had an aggregate demand and aggregate supply according to the following schedule: Price level Aggregate Demand Short-Run Aggregate Supply Long-Run Aggregate Supply 90 $1125.00 $1320.00 100 $1200.00 $1320.00 110 $1275.00 $1320.00 120 $1350.00 $1320.00 130 $1425.00 $1320.00 140 $1500.00 $1320.00 150 $1575.00 $1320.00 $1575.00 $1500.00 $1425.00 $1350.00 $1275.00 $1200.00 $1125.00 What was Microtania's short-run equilibrium output 2003? $| Calculate Microtania's output gap: $
Expert Solution
Step 1

Short-run equilibrium output occurs at the intersection of aggregate demand and short-run aggregate supply curve. 

Long run aggregate supply curve depicts the potential output that can be produced by an economy. 

There is an output gap in the economy when short-run equilibrium output and potential output are not equal.

 

 

 

 

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