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Problems
Problems
21.
Use Table 12.3 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 12.3
- 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?