Suppose the full employment of real output (Q) for a hypothetical economy is $25

Question

Suppose the full employment of real output (Q) for a hypothetical economy is $250 and the price level (P) initially is 100. Use the short - run aggregate supply schedules below to answer questions that follow: Instructions: Enter your answers as whole numbers. what will be the level of real output in the price level unexpectedly falls from 100 to 75 because of decrease in aggregate demand? What will be the level of real output in the long run when the price level rises from 100 to 125? When the price level falls from 100 to 75? $ Show the effect of an increases in the price level from 100 t0 125 both in the short run and in the long run. Derive the long - run aggregate supply Curve. Instructions: (1) Use the tool provided "a" to identify what happens in the price level unexpectedly rises from 100 to 125 (2) Use the tool provided "b" to identify what happens in the price level unexpectedly rises from 100 to 125. (3) Use the tool provided "AS" to identify what happens in the price level unexpectedly rises from 50 to 150.

Explanation / Answer

a 1. 280 2. 220

b 1. 250 2. 250

If you need explanation also , then comment , i'ill revert back on the same. :)

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