QUESTION TWO

a)Suppose the aggregate demand and supply schedules for a hypothetical economy are as shown below:

Amount of real

Amount of real domesticPrice leveldomestic output

output demanded, billions(price index)supplied, billions

$200300$800

400250800

600200600

800150400

1,000100200

(i)Use these sets of data to graph the aggregate demand and supply curves on the below graph.

(ii)What will be the equilibrium price and output level in this hypothetical economy?Is it also the full-employment level of output?Explain.