Consider the table below for the aggregate supply (AS), and aggregate demand (AD
ID: 1191400 • Letter: C
Question
Consider the table below for the aggregate supply (AS), and aggregate demand (AD), for goods and services in the United States.
Price Level – P (Y Axis)
Real GDP Demanded in billions (AD)
Real GDP Supplied in billions (AS)
50
16,300
15,100
60
16,200
15,200
70
16,100
15,300
80
16,000
15,400
90
15,900
15,500
100
15,800
15,600
110
15,700
15,700
120
15,600
15,800
130
15,500
15,900
140
15,400
16,000
150
15,300
16,100
160
15,200
16,200
170
15,100
16,300
2. a. Calculate the slope of the AD curve using data in the table/graph.
b. Calculate the slope of the AS curve using data in the table/graph.
c. Using 3-4 well-written sentences and numerical examples in the table for the each of the following two questions.
(i) Explain why the AD curve has the slope you calculated as a result of the “wealth effect”.
(ii) Explain why the AS curve has the slope you calculated as a result of the “sticky price theory”.
Price Level – P (Y Axis)
Real GDP Demanded in billions (AD)
Real GDP Supplied in billions (AS)
50
16,300
15,100
60
16,200
15,200
70
16,100
15,300
80
16,000
15,400
90
15,900
15,500
100
15,800
15,600
110
15,700
15,700
120
15,600
15,800
130
15,500
15,900
140
15,400
16,000
150
15,300
16,100
160
15,200
16,200
170
15,100
16,300
Explanation / Answer
Consider the table below for the aggregate supply (AS), and aggregate demand (AD