# Analysis of Aggregate Demand and Aggregate Supply in Gizmet (2023-2024)In the year 2023, aggregate demand and aggregate supply in the fictional country of Gizmet are represented by the curves $AD_{2023}$ and AS on the following graph. The price level is 102. The graph also shows two possible outcomes for 2024. The first potential aggregate demand curve is given by the $AD_A$ curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the $AD_B$ curve, resulting in the outcome illustrated by point B.## Graph Explanation:![AD-AS Graph](image.jpg)The graph consists of:- The vertical axis labeled "PRICE LEVEL" ranging from 101 to 108.- The horizontal axis is labeled "OUTPUT (Trillions of dollars)" ranging from 0 to 16.- The aggregate supply curve (AS) is plotted as a positively sloped line.- The aggregate demand curve for 2023 ($AD_{2023}$) is a negatively sloped line intersecting the AS curve at a price level of 102 and an output level of approximately 6 trillion dollars (Point (6, 102)).- Two potential aggregate demand curves for 2024, $AD_A$ and $AD_B$, both negatively sloped, are also displayed. - $AD_A$ intersects the AS curve at a price level of 104 and an output level of approximately 7 trillion dollars (Point A (7, 104)). - $AD_B$ intersects the AS curve at a higher price level of 106 and an output level of approximately 8 trillion dollars (Point B (8, 106)).## Analysis Questions:1. Suppose the unemployment rate is 6% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect: - The $AD_B$ scenario, depicted by point B with a higher output, is likely associated with the lower unemployment rate (5%).2. If aggregate demand is low in 2024 and the economy is at outcome A, the inflation rate between 2023 and 2024 is: - Relatively moderate. Inflation is the increase in the price level from 102 (2023) to 104 (2024), which is an inflation rate of approximately 1.

Aggregate Demand and Aggregate Supply Consumer spending refers to the entire amount of demand for…

In the year 2023, aggregate demand and aggregate supply in the fictional country of Gizmet are represented by the curves AD2023 and AS on the following graph. The price level is 102. The graph also shows two possible outcomes for 2024. The first potential aggregate demand curve is given by the ADA curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the ADB curve, resulting in the outcome illustrated by point B. PRICE LEVEL 108 107 106 105 103 102 101 100 0 AD2023 2 AS ADA 10 4 6 8 OUTPUT (Trillions of dollars) 12 ADB 14 16 Suppose the unemployment rate is 6% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (5%). If aggregate demand is low in 2024, and the economy is at outcome A, the inflation rate between 2023 and 2024 is

In the year 2023, aggregate demand and aggregate supply in the fictional country of Gizmet are represented by the curves AD2023 and AS on the following graph. The price level is 102. The graph also shows two possible outcomes for 2024. The first potential aggregate demand curve is given by the ADA curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the ADB curve, resulting in the outcome illustrated by point B. PRICE LEVEL 108 107 106 105 103 102 101 100 0 AD2023 2 AS ADA 10 4 6 8 OUTPUT (Trillions of dollars) 12 ADB 14 16 Suppose the unemployment rate is 6% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (5%). If aggregate demand is low in 2024, and the economy is at outcome A, the inflation rate between 2023 and 2024 is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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