Suppose that the aggregate demand and aggregate supply schedules for a hypotheti

Question

Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are:

1. Refer to the above data. If the price level is 150 and producers supply $300 of real output:

A. neither a shortage nor a surplus of real output will occur.

B. a shortage of real output of $200 will occur.

C. a surplus of real output of $300 will occur.

D. a shortage of real output of $100 will occur.

2. Refer to the above data. If the amount of real output demanded at each price level falls by $200, the equilibrium price level and equilibrium level of real domestic output will fall to:

A. 200 and $300, respectively.

B. 150 and $200, respectively

C. 150 and $300, respectively

D. 250 and $200, respectively

Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are: 1. Refer to the above data. If the price level is 150 and producers supply $300 of real output: A. neither a shortage nor a surplus of real output will occur. B. a shortage of real output of $200 will occur. C. a surplus of real output of $300 will occur. D. a shortage of real output of $100 will occur. 2. Refer to the above data. If the amount of real output demanded at each price level falls by $200, the equilibrium price level and equilibrium level of real domestic output will fall to: A. 200 and $300, respectively. B. 150 and $200, respectively C. 150 and $300, respectively D. 250 and $200, respectively

Explanation / Answer

Amount of Real Output Demanded at price level (index value) 150 = $500 Amount of Real Output Supplied at price level (index value) 150 = $300 Hence, the actual difference amount = $200 (shortage) Thus, the right option is (B) a shortage of real output of $200 will occur. (2) If the amount of real output demanded at each price level falls by $200, the equilibrium price level and equilibrium level of real domestic output will fall to: (A) 200 and $300, respectively

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