Use the figure below to answer the following questions.
Figure 12.2.3
-Refer to Figure 12.2.3.Assume that the figure illustrates an economy initially in equilibrium at the intersection of the SAS₀curve and the AD₀curve.If the aggregate demand curve is expected to shift to AD₁but remains at AD₀, the new equilibrium real GDP is _______ and the new equilibrium price level is _______.

Question

Use the figure below to answer the following questions.

Figure 12.2.3
-Refer to Figure 12.2.3.Assume that the figure illustrates an economy initially in equilibrium at the intersection of the SAS₀curve and the AD₀curve.If the aggregate demand curve is expected to shift to AD₁but remains at AD₀, the new equilibrium real GDP is _______ and the new equilibrium price level is _______.

Quizplus · Accepted Answer

When the AD curve shifts to the right but stays at the same level, the new equilibrium will occur at the intersection of the new AD curve with the SAS curve. In this case, the new equilibrium real GDP is where the AD curve intersects with SA₀ at $380 billion. The equilibrium price level remains at 125.

Use the Figure Below to Answer the Following Questions