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Exhibit: Aggregate Demand and Aggregate Supply at Different Price Levels

-(Exhibit: Aggregate Demand and Aggregate Supply at Different Price Levels) The table shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion. What is the initial real GDP and price level?
A) Real GDP = 7.6 trillion; price level = 1.2
B) Real GDP = 7.6 trillion; price level = 2.8
C) Real GDP = 6.8 trillion; price level = 2.0
D) Real GDP = 7.8 trillion; price level = 1.0

Question

Use the following to answer questions .
Exhibit: Aggregate Demand and Aggregate Supply at Different Price Levels
 
-(Exhibit: Aggregate Demand and Aggregate Supply at Different Price Levels) The table shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion. What is the initial real GDP and price level?
A) Real GDP = 7.6 trillion; price level = 1.2 
B) Real GDP = 7.6 trillion; price level = 2.8 
C) Real GDP = 6.8 trillion; price level = 2.0 
D) Real GDP = 7.8 trillion; price level = 1.0

Quizplus · Accepted Answer

The initial real GDP is where the aggregate demand and short-run aggregate supply curves intersect, which is approximately $6.8 trillion. The corresponding price level is approximately 2.0.

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