84 Problems

Problems

21. Use Table 26.3 to answer the following questions.

Price Level Aggregate Supply Aggregate Demand
90 3,000 3,500
95 3,000 3,000
100 3,000 2,500
105 3,000 2,200
110 3,000 2,100

Table 26.3

Sketch an aggregate supply and aggregate demand diagram.

  • What is the equilibrium output and price level?
  • If aggregate demand shifts right, what is equilibrium output?
  • If aggregate demand shifts left, what is equilibrium output?
  • In this scenario, would you suggest using aggregate demand to alter the level of output or to control any inflationary increases in the price level?

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