When determining algebraically the current level of aggregate output from an equation for aggregate demand, such as Y = 3401 + 2.887M/P, you must know
A) last period's output.
B) last period's price level.
C) this period's inflation rate.
D) last period's inflation rate.
E) all of the above.

Question

Quizplus · Accepted Answer

To determine the current level of aggregate output algebraically from an equation for aggregate demand like Y = 3401 + 2.887M/P, you need to know the variables in the equation. In this case, M represents the money supply and P represents the price level. While the question does not directly state the need for last period's output, price level, or inflation rates, understanding the context of economic models often requires knowledge of previous periods to assess changes in variables like the money supply (M) and price level (P). However, the specific equation provided primarily requires knowledge of the current money supply and current price level to calculate current aggregate output. The inclusion of all the options in the correct answer may have been misleading, as the most accurate answer based on the given equation should focus on the money supply and price level directly involved in the calculation.

When Determining Algebraically the Current Level of Aggregate Output from an Equation