Assume that the accompanying graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced.

(a) What is the equilibrium rate of output?

(b) How far short of full employment is the equilibrium rate of output?

(c) Illustrate a shift of aggregate demand that would change the equilibrium rate of output to $5 trillion. Label the new curve AD₂.

(d) What is the price level at this full-employment equilibrium?

(e) Illustrate a shift of aggregate supply (AS₂) that would, when combined with AD₁, move equilibrium output to $5 trillion.

(f) What is the price level at this new equilibrium?