1.16 Suppose the aggregate demand and shorlrun aggregate supply schedules for Utopia economy whose potential output (Le GDP at full employment) equals $2,700 are given by the table below. State the shortrun equilibrium level of real GDP and the price level. Hint: Use excel to draw aggregate demand curve, short run supply cu we and longrung supply curve [potential output]. Aggregate Quantity of Goods and Services Price Level Demanded 0.50 $3,500 0.75 3,000 1.00 2,500 1.25 2,000 1.50 1,500 O a. Price level 0.8; real GDP 2100 O b. Price level 1; real GDP 2000 O c. Price level 0.8; real GDP 2500 O a. Price level 0-9; real GDP 2250 Supplied $ 1,000 2,000 2,500 2,700 2,800 1.17 Characterize the current economic situation Utopia, Is there an inflationary or a recessionary gap? If so, how large is it? 0 a. Recessionary gap of 450 O b. Recessionary gap of 700 O c. No gap because short run equilibrium is equal to potential output 0 d. Inationary gap of 450 1.18 Which of the macroeconomic policy actions below Utopia government must employ to close the gap? 0 a. Utopia must do nothing as there is no recessionary or inflationary gap 0 b. Utopia government must increase imports to close the gap. 0 c. Utopia government must increase consumption, investment to close gap 0 d. Utopia government must increase taxes to close the gap