Refer to the data in the table below. Suppose that the present equilibrium price
ID: 1224367 • Letter: R
Question
Refer to the data in the table below. Suppose that the present equilibrium price level and level of real GDP are 100 and S235, and that data set A represents the relevant aggregate supply schedule for the economy. Instructions: Enter your answers as whole numbers. What must be the current amount of real output demanded at the 100 price level? If the amount of output demanded increased by $50 at the 100 price levels shown in A, what would be the new equilibrium real GDP? In business cycle terminology, what would economists call this change in real GDP?Explanation / Answer
a) Since economy is in equilibrium, so real output demanded = equilibrium real GDP= 235 $
b) Output demanded in A rises by 50,so new level of output demanded=235+50=285 $ at price=100
Since there is no change in price,so output supplied also rises by 50, so new equilibrium =285 $
It is called expansion (rise in real GDP).