1.Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the long-run aggregate supply, LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an indexnumber).

a.What is the equilibrium pricelevel?

P = _________.

b.What is the actual short-runoutput?

SRAS = __________.

c.What is the outputgap?

Output gap = ________________.

d.What could be the unemployment rate if the natural rate of unemployment is5%?

U = ______4.7%__________.

e.Assume that the present status of the economy is the result of a supply shock. What could be the original equilibrium (price level andoutput)?

Original equilibrium price level = _________________ .

Original equilibrium output = _________________.

f.What will be the new long-run equilibrium without any policyaction?

Long run equilibrium output = _____________ .

Long run equilibrium price level = ____________ .

g.What will be the aggregate demand curve when the labor marketadjusts?

AD = _______ + ________ P