The table gives the aggregate demand and aggregate supply schedules for a nation.
-Refer to the table above.If the price level is 120,then the aggregate quantity demanded is ________ than the aggregate quantity supplied and the price level ________.
A)greater;rises
B)greater;falls
C)less;rises
D)less;falls
E)less;might fall,rise or not change depending on whether real GDP is more than,less than,or equal to potential GDP.

Question

The table gives the aggregate demand and aggregate supply schedules for a nation.
-Refer to the table above.If the price level is 120,then the aggregate quantity demanded is ________ than the aggregate quantity supplied and the price level ________.
A)greater;rises 
B)greater;falls 
C)less;rises 
D)less;falls 
E)less;might fall,rise or not change depending on whether real GDP is more than,less than,or equal to potential GDP.

Quizplus · Accepted Answer

At a price level of 120, the aggregate quantity demanded is less than the aggregate quantity supplied, resulting in a surplus. In order to clear the market, suppliers will lower prices, causing the price level to fall. Therefore, the correct answer is D) less; falls.

The Table Gives the Aggregate Demand and Aggregate Supply Schedules