Instructions: In parts a and b, round your responses to one decimal place if necessary. In part c, enter your response as a whole number. a. What is the equilibrium rate of output? trillion per year b. How much in excess of full employment is the equilibrium rate of output? trillion c. If aggregate demand shifted enough for the economy to reach full-employment equilibrium, what is the price level at this full- employment equilibrium?

Instructions: In parts a and b, round your responses to one decimal place if necessary. In part c, enter your response as a whole number. a. What is the equilibrium rate of output? trillion per year b. How much in excess of full employment is the equilibrium rate of output? trillion c. If aggregate demand shifted enough for the economy to reach full-employment equilibrium, what is the price level at this full- employment equilibrium?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter26: The Neoclassical Perspective

Section: Chapter Questions

Problem 21P: Use Table 26.3 to answer the following questions. Sketch an aggregate supply and aggregate demand...

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Question

Assume that the accompanying graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when
$1.5 trillion of real output is produced. The economy is currently in equilibrium at point A.
Price Level (average price)
260
240
220
200
180
160
140
120
100
0
AS,
AD
1 2 3
Real Output (in trillions of dollars per year)
4 5 6 7 8

Instructions: In parts a and b, round your responses to one decimal place if necessary. In part c, enter your response as a whole
number.
a. What is the equilibrium rate of output?
$
trillion per year
b. How much in excess of full employment is the equilibrium rate of output?
trillion
c. If aggregate demand shifted enough for the economy to reach full-employment equilibrium, what is the price level at this full-
employment equilibrium?

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Assume that the accompanying graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced. The economy is currently in equilibrium at point A. Price Level (average price) 260 240 220 200 180 160 140 120 100 0 1 A AS₁ 2 3 4 5 6 7 AD₁ Real Output (in trillions of dollars per year) 8 Tools EQ Instructions: In parts a, b, and d, enter your responses as a whole number. a. What is the equilibrium rate of output? $ trillion per year b. How far short of full employment is the equilibrium rate of output? $ trillion c. On the graph, illustrate a shift of aggregate demand that would change the equilibrium rate of output to $5 trillion. Instructions: Shift the aggregate demand curve (AD1) such that the equilibrium in the macro model is at $5 trillion. Then use the tool provided 'EQ' to label the new equilibrium. d. What is the price level at this full-employment equilibrium?
The table below shows aggregate demand and aggregate supply schedules in a hypothetical economy, Acadia. Aggregate Demand and Aggregate Supply Schedules for Acadia Real GDP Price Level (2012 = 100) 140 130 120 110 100 (ADO) 190 210 230 250 270 (AD1) (ASO) (2012 $ billions) 240 260 280 300 320 270 260 230 180 110 (AS1) 310 300 280 250 190 a. Draw a graph showing Acadia's ADo, ADI, ASo, and AS1. Plot only the endpoints of the two aggregate demand curves and all five points for each of the two aggregate supply curves. b. If initially ADo and ASo are the relevant schedules, what are Acadia's equilibrium price level and real output? What happens if the price level is 140? 110? c. If aggregate demand shifts from ADo to AD1 while aggregate supply remains at ASo what are Acadia's new equilibrium price level and real output? Describe this change in aggregate demand. d. If aggregate supply shifts from ASo to AS1 while aggregate demand returns to ADo, what are Acadia's new equilibrium price level…
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