In the above figure, if the relevant aggregate demand curve is AD2, what are the short-run equilibrium price level and real GDP?
A) 130 and $12 trillion
B) 130 and $11.5 trillion
C) 120 and $11.5 trillion
D) 120 and $12 trillion

Question

Quizplus · Accepted Answer

At AD2, the short-run equilibrium is at the intersection of AD2 and SRAS. The intersection occurs at a price level of 120 and real GDP of $11.5 trillion. Thus, the correct answer is C.

In the Above Figure, If the Relevant Aggregate Demand Curve