Aggregate Supply and Aggregate Demand

Price Real GDP Supplied Real GDP Demanded

$250 1500 5500

$500 3000 5000

$750 4500 4500

$1000 4500 4000

Complete parts a, b, c, and d.

a. Plot the aggregate supply and aggregate demand curves on the same graph.

b. State the equilibrium real GDP and price level.

c. At the equilibrium GDP from part b, is the economy experiencing a recessionary gap? Explain why it is or is not experiencing a recessionary gap.

e. State what happens to the nominal wages and the real wage in the short run phase of the aggregate supply.