The following graph shows three total expenditure lines for an economy at three different price levels. AE130 corresponds to the price level of 130; AE110 corresponds to the price level of 110; AE150 corresponds to the price level of 150. The black line (which starts in the bottom left corner) is a 45-degree line illustrating the set of points for which real GDP and total expenditure are equal. PRICE LEVEL 160 150 AGGREGATE EXPENDITURES (Billions of dollars) 140 130 120 110 100 90 800 700 0 600 500 400 300 200 100 0 The level of equilibrium output at a price level of 110, is 0 On the following graph, plot the aggregate demand curve that results from varying the price level from 110 to 130 to 150, holding all else equal. 100 200 300 400 500 REAL GDP (Billions of dollars) 100 600 200 300 400 500 REAL GDP (Billions of dollars) 700 600 AE 110 AE130 700 800 AE150 800 -0 Aggregate Demand (AD)

The following graph shows three total expenditure lines for an economy at three different price levels. AE130 corresponds to the price level of 130; AE110 corresponds to the price level of 110; AE150 corresponds to the price level of 150. The black line (which starts in the bottom left corner) is a 45-degree line illustrating the set of points for which real GDP and total expenditure are equal. PRICE LEVEL 160 150 AGGREGATE EXPENDITURES (Billions of dollars) 140 130 120 110 100 90 800 700 0 600 500 400 300 200 100 0 The level of equilibrium output at a price level of 110, is 0 On the following graph, plot the aggregate demand curve that results from varying the price level from 110 to 130 to 150, holding all else equal. 100 200 300 400 500 REAL GDP (Billions of dollars) 100 600 200 300 400 500 REAL GDP (Billions of dollars) 700 600 AE 110 AE130 700 800 AE150 800 -0 Aggregate Demand (AD)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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