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Suppose that the aggregate demand and the aggregate supply schedules for a hypothetical economy are
as shown below: mount of reel Amount of reel
domestic output Price level domestic output euppl ied
billions a. Use these data to graph the aggregate demand and supply curves. Instructions: 1. Use the line tools "AD" and "A5" to draw the aggregate demand (plot 5 points total) and aggregate
supply curves (plot 5 points total) given in the table above. To earn full credit for this graph, you must plot all required points for each curve. 2. Use the drop line tool called "Eq" to indicate the equilibrium price level and the equilibrium level of
real output. 3. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up.
You can use this to enter exact co-ordinates for your points as needed.

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AD
350 -
AS
300-
Ea
250-
Price level
AD1
200 -
150 -
100-
50 -
100
200
300
400
500
600
700
Real domestic output ($billions)
reset
What is the equilibrium price level and level of real output in this hypothetical economy?
Equilibrium price level =

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Equilibrium level of real output = $ |:| billion
Is the equilibrium real output also the full-employment real output? {Click to select} 3 b. Ifthe price level in this economy is 150, will quantity demanded equal, exceed, or fall short of quantity
supplied? {Click to select) 3 By what amount? $ |:| billion If the price level is 250, will quantity demanded equal, exceed, or fall short of quantity supplied? {Click to select} 3 By what amount? $ billion

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c—1. Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in
the new aggregate demand curve as A01. Instruction: In the above graph use the line tool "AD1" to sketch in the new aggregate demand curve.
Plot the two end points. c—2. What is the new equilibrium price level and the level of real output? The new equilibrium price level = |: The new level of real output = $ billion

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Top Answer

(a) See diagram attached in the Explanation section. Equilibrium price level = $200 billion. Equilibrium real domestic output... View the full answer

25012020 AD-AS graph 1.png

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