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Equilibrium price level and the equilibrium level

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Reference no: EM131174335

Using the hypothetical economy data in the table below, calculate the aggregate demand and supply, as well as its price level.

Amount of Real GDP Demand, in Billions

Price Level (Price Index)

Amount of Real GDP Supplied, in Billions

$200

400

$600

$300

350

500

$400

300

400

$500

200

300

$600

150

200

Then address the following:

  • What is the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Use Excel to graph both the aggregate demand and aggregate supply curves. Can there be equilibrium level of output at below full employment?
  • At what price level will aggregate supply equal aggregate demand? At what price level will demand fall below aggregate supply? If given a price level of 200, will aggregate demand exceed supply?
  • If the aggregate demand schedule shifted by $200 billion to the right at every level, what would be the new equilibrium level of income?

Reference no: EM131174335

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