Chapter 29: Problems 2, a and b, and 3, a through c, Problem 2: Refer to Figure

Question

Chapter 29: Problems 2, a and b, and 3, a through c, Problem 2: Refer to Figure 2 in the Appendix and assume that Q 1 is $400 and Q2 is $500, the price level is stuck at P1 and the slopes of the AE lines in Figure 2a are .75 and equal to the MPC. In what direction and by how much does the aggregate expenditures schedule I Figure 2a need to shift to move the aggregate demand curve in Figure 2b from AD1 to AD2? What is the multiplier in this example? Given the multiplier, what must be the distance between AD1 and the broken line to its right at P1? Problem 3: Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown at the top left of the next page. a. Use the data above to paragraph the aggregate demand and aggregate supply curves. What is the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Is the equilibrium real output also necessarily the full employment real output? b. If the price level in this economy is 150, will quantity demanded equal, exceed or fall short of quantity supplied? By what amount? If the price level is 250, will quantity demanded equal, exceed or fall short of quantity supplied? By what amount? c. Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in the new aggregate demand curve as AD1. What is the new equilibrium price level and level or real output?

Explanation / Answer

There is no appendix or figure... please post question with full information thanx :D

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