$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Amount of Real Output } \
\text { Demanded }
\end{array} & \text { Price Level (Index Value) } & \begin{array} { c }
\text { Amount of Real Output } \
\text { Supplied }
\end{array} \
\hline \$ 200 & 300 & \$ 500 \
\hline 300 & 250 & 450 \
\hline 400 & 200 & 400 \
\hline 500 & 150 & 300 \
\hline 600 & 100 & 200 \
\hline
\end{array}$$ The table gives aggregate demand and supply schedules for a hypothetical economy. If the amount of real output demanded at each price level falls by $200, the equilibrium price level and
Equilibrium level of real domestic output will fall to
A) 250 and $200, respectively.
B) 200 and $300, respectively.
C) 150 and $300, respectively.
D) 150 and $200, respectively.

Question

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Amount of Real Output } \
\text { Demanded }
\end{array} & \text { Price Level (Index Value) } & \begin{array} { c } 
\text { Amount of Real Output } \
\text { Supplied }
\end{array} \
\hline \$ 200 & 300 & \$ 500 \
\hline 300 & 250 & 450 \
\hline 400 & 200 & 400 \
\hline 500 & 150 & 300 \
\hline 600 & 100 & 200 \
\hline
\end{array}$$ The table gives aggregate demand and supply schedules for a hypothetical economy. If the amount of real output demanded at each price level falls by $200, the equilibrium price level and
Equilibrium level of real domestic output will fall to
A) 250 and $200, respectively.
B) 200 and $300, respectively.
C) 150 and $300, respectively.
D) 150 and $200, respectively.

Quizplus · Accepted Answer

If the amount of real output demanded decreases by $200 at each price level, the demand curve shifts to the left. The new equilibrium price level will be the intersection of the new aggregate demand curve and the aggregate supply curve. The new equilibrium price level is $150 and the new equilibrium level of real domestic output is $300. This can be seen by looking at the row where the quantity demanded is $400. Originally, this quantity was demanded at a price level of $200. However, with a $200 decrease in the quantity demanded at each price level, this quantity is now demanded at a price level of $150, which is the new equilibrium price level. The corresponding equilibrium level of real domestic output is $300, which is the quantity supplied at this price level.

The Table Gives Aggregate Demand and Supply Schedules for a \hline

The Table Gives Aggregate Demand and Supply Schedules for a
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