Use the following table to answer the questions below. Aggregate Price Level Output (SRAS) Output (Aggregate Demand) 150 1,000 200 125 800 400 100 600 600 75 400 800 50 200 1,000 Graph the aggregate demand (AD) and the short-run aggregate supply (SRAS) curves. Label them AD1 and SRAS1. What are the aggregate output (Y) and the aggregate price level? Assume aggregate demand grows by 200 at each price level. Graph the new AD and label AD2. What are the new aggregate output (Y) and the aggregate price level? If full-employment output is 600, is the economy experiencing recessionary or inflationary pressures? If the economy experiences “self-correction”, how much would the SRAS curve need to shift in order for the economy to return to full-employment output at 600? What would be the new equilibrium aggregate price level.

Aggregate demand : Aggregate demand is a measurement of the total amount of demand for all finished…

Answered: Use the following table to answer the…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter20: Aggregate Demand And Supply

Section: Chapter Questions

Problem 8SQP

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Use the following table to answer the questions below.

Aggregate Price Level Output (SRAS) Output (Aggregate Demand)

150 1,000 200

125 800 400

100 600 600

75 400 800

50 200 1,000

Graph the aggregate demand (AD) and the short-run aggregate supply (SRAS) curves. Label them AD1 and SRAS1. What are the aggregate output (Y) and the aggregate price level?

Assume aggregate demand grows by 200 at each price level. Graph the new AD and label AD2. What are the new aggregate output (Y) and the aggregate price level?

If full-employment output is 600, is the economy experiencing recessionary or inflationary pressures?

If the economy experiences “self-correction”, how much would the SRAS curve need to shift in order for the economy to return to full-employment output at 600? What would be the new equilibrium aggregate price level.

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