In Japan, potential GDP is 600 billion yen. The table shows the aggregate demand and short-run aggregate

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In Japan, potential GDP is 600 billion yen. The table shows the aggregate demand and short-run aggregate supply schedules. Price level Real GDP demanded Billions of 2007 yen Real GDP supplied in the short run Billions of 2007 yen

Price Level

75 600 400

85 550 450

95 500 500

105 450 550

115 400 600

125 350 650

135 300 700

i. Draw an AS-AD diagram for Japan’s economy.

ii. What is the short-run equilibrium real GDP and price level?

iii. What is the long-run equilibrium real GDP and price level?

iv. Does Japan have an inflationary gap or a recessionary gap and what is the size of the gap?

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Foundations of Macroeconomics

ISBN: 978-0134492001

8th edition

Authors: Robin Bade, Michael Parkin

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Posted Date: Jul 15, 2022 02:37 AM

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In Japan, potential GDP is 600 billion yen. The table shows the aggregate demand and short-run aggregate

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a Price level 160 140 ... View the full answer

Foundations of Macroeconomics

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