Suppose the aggregate demand (AD) and short-run aggregate supply (AS) schedules for an economy whose potential GDP (LRAS) equals to $2,700 are given by the table. 1.According to the macroeconomic perspectives, which zone is the short-run equilibrium falling into? 2.Would you expect unemployment rate of this economy to be relatively high or low, and explain why? What about the price level, a large or small concern, and why? 3. Now suppose aggregate demand increases by $700 at each price level; for example, the new aggregate demanded at a price level of 50 now equals to $4,200. Add a column of the new aggregate demanded at each price level in the above table. Plot a new AD curve (on the same graph you got in a.) and label the new equilibrium on the same graph.
Suppose the aggregate demand (AD) and short-run
1.According to the
2.Would you expect
3. Now suppose aggregate demand increases by $700 at each price level; for example, the new aggregate demanded at a price level of 50 now equals to $4,200. Add a column of the new aggregate demanded at each price level in the above table. Plot a new AD curve (on the same graph you got in a.) and label the new equilibrium on the same graph.
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