Problem Set #8 l. The following table shows the aggregate demand aggregate supply schedules for a hypothetical economy. Use the table to answer the following questions: Real Real Domestic Domestic Output Price Output Supplied Level Demanded [in {Index [in Billions} Value} Billions} 150 90 1525 300 93 1400 450 106 1275 600 114 1150 750 122 1025 900 130 900 1050 138 775 1200 146 550 1350 154 525 a. Original economy (4 pts) ' Make a sketch of the economy depicted in the table above. You can draw the graph by 1. ii. iii. b. Suppose that a crippling pandemic happens so that the quantity of real domestic output demanded changed by $275 billion at each price level. (4 pts.} i. ii. hand, but I would really recommend using Desmos. Here is the link for a tutorial: htt s:f;'www. outube.comfwatch?v=lV WRFerPY ECON 2205 19 pts. Identify the equilibrium price level and quantity of real domestic output on the graph. Label the output demand curve as AD] and the output supplied curve as SRASI. Fill out the table below to reect this change. Refer back to the rst table as a starting point. Add the new curve to your sketch from part a and label it. Real Real Domestic Domestic Output Price Output Supplied Level Demanded ll {Index [in Billions} Value} Billions} 90 98 106 114 122 130 138 146 154 iii. What would be the new equilibrium price level and quantity of real domestic output? Identify these on the graph, too. c. Suppose the economy's potential GDP is 900. (5 pts.) i. Draw in the LRAS curve on the graph in part a. ii. How big is the output gap after the change in the real domestic output demanded occurs in part b? iii. And is the gap positive or negative? (meaning is the gap a recessionary gap or an inflationary gap?) iv. What has happened to unemployment compared to full employment at potential GDP? v. What has happened to prices compared to prices at potential GDP? d. If there is no policy change and the economy is allowed to adjust on its own, what is the correction that the market makes on its own and what is the approximate eventual final equilibrium? You need a price and quantity for this final equilibrium. Sketch a picture of what this looks like. (3 pts.) e. Suppose policy makers don't want to wait until the market adjusts on its own and they enact fiscal policy. (3 pts.) i. What kind of fiscal policy can policymakers enact and what three forms could they choose to help solve this problem? ii. What is the approximate eventual final equilibrium