AGGREGATE DEMAND AND AGGREGATE SUPPLY IN-CLASS WORKSHEET 2 This question explores equilibrium in the aggregate demand and aggregate supply model. You will use schedules for an aggregate demand line and an aggregate supply line to identify the equilibrium price level and real GDP in a macroeconomy. Below, you are provided the schedules for an aggregate demand line and an aggregate supply line. Price Level (Consumer Price Index) Aggregate Demand Real GDP (billions of dollars) Aggregate Supply Real GDP (billions of dollars) 80 $11 $ 8 90 $10 $10 100 $9 $12 110 $8 $14 120 $7 $16 Task 1: Identify the macroeconomic equilibrium price level in this economy. Task 2: Identify the macroeconomic equilibrium level of real GDP in this economy. Task 3: If the full employment level of real GDP is $9 billion, can you discern whether this economy is experiencing an inflationary gap or a recessionary gap? Task 4: Suppose personal income taxes fall. Would you expect real GDP to rise above or fall below the value you identified in Task 2