A country has a long-run aggregate supply of $6,400. The short-run aggregate supply and aggregate demand...

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A country has a long-run aggregate supply of $6,400. The short-run aggregate supply and aggregate demand are shown in the table below. Price Aggregate Aggregate Level Demand Supply 110 $6,800 $5,000 115 $6,600 $5,400 120 $6,400 $5,800 125 $6,200 $6,200 130 $6,000 $6,600 1. What is the equilibrium price and rGDP in this economy? 2. If consumer confidence is high and increases AD by $600, what will the new equilibrium price and rGDP be? 3. During a recession will the economy be at the long-run level of real GDP? Explain your answer. A country has a long-run aggregate supply of $6,400. The short-run aggregate supply and aggregate demand are shown in the table below. Price Aggregate Aggregate Level Demand Supply 110 $6,800 $5,000 115 $6,600 $5,400 120 $6,400 $5,800 125 $6,200 $6,200 130 $6,000 $6,600 1. What is the equilibrium price and rGDP in this economy? 2. If consumer confidence is high and increases AD by $600, what will the new equilibrium price and rGDP be? 3. During a recession will the economy be at the long-run level of real GDP? Explain your answer.

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Solution 1 To find the equilibrium price and real GDP we need to set the aggregate demand equal to the aggregate supply Lets do that Aggregate Demand ... View the full answer