Suppose that the economy is self-regulating, that the price level is 110, that the quantity demanded of
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Suppose that the economy is self-regulating, that the price level is 110, that the quantity demanded of Real GDP is
$4 trillion, that the quantity supplied of Real GDP in the short run is $4.9 trillion, and that the quantity supplied of Real GDP in the long run is $4.1 trillion. Is the economy in short-run equilibrium? Will the price level in long-run equilibrium be greater than, less than, or equal to 110?
Explain your answers.
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Kirti Kaushal
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