6. (LO 1, 2) Figure 13.10 shows the aggregate demand for the economy of Bachland. Its potential GDP (LAS) is $350.

According to neoclassical theory:

a) If the price level is 110, is the economy of Bachland currently in equilibrium? If not, what might happen?

b) If, instead, the economy of Bachland were in equilibrium, what would happen to GDP and the price level if aggregate demand were to increase by $50?

According to Keynesian theory

c) If the present price level is 110 and the economy of Bachland is in equilibrium, what is the level of real GDP?

d) If the economy of Bachland were in equilibrium at a price of 110 and a GDP of 250, what would happen to GDP and the price level if aggregate demand were to increase by $50?