Question
Aggregate Demand The following chart shows data on aggregate supply, aggregate demand, and the price level for the fictional country of Westobia. PRICE LEVEL: 220
Aggregate Demand
The following chart shows data on aggregate supply, aggregate demand, and the price level for the fictional country of Westobia.
PRICE LEVEL: 220
AD: 640
AS: 540:
PRICE LEVEL: 230
AD: 630
AS: 580
PRICE LEVEL: 240
AD: 620
AS: 620
PRICE LEVEL: 250
AD: 610
AS: 660
PRICE LEVEL: 260
AD: 600
AS: 680
PRICE LEVEL: 270
AD: 590
AS: 700
PRICE LEVEL: 280
AD: 580
AS: 710
- On a complete labeled AD/AS graph, plot the AD/AS diagram from the data.Identify the equilibrium, labeling it E.
- Imagine that, as a result of a government tax cut, aggregate demand becomes higher by 50 at every price level.Plot the new AD on your graph, labeling the new equilibrium E2.
- How will the new equilibrium alter output?
- How will it alter the price level?
- What do you think will happen to employment?
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Operations Management Processes And Supply Chains
Authors: Lee Krajewski, Naresh Malhotra, Larry Ritzman
13th Global Edition
129240986X, 978-1292409863
