Questions:1. The level of equilibrium output at a price of 100, is _____ billion (400,200,600,100) 2. Then, on the following graph, plot the aggregate demand curve that results from varying the price level from 100 to 120 to 140, holding all else equal. HINT: real income and the quantity of output are equivalent. For example, the real income of $100 billion is the same as a quantity of output $100 billion.

7. Deriving aggregate demand from the income-expenditure model The following graph shows three planned expenditure lines for an economy at three different price levels. PE120 corresponds to the price level of 120; PE100 corresponds to the price level of 100; PE140 corresponds to the price level of 140. The black line (which starts in the bottom left corner) is a 45-degree line illustrating the set of points for which real income and planned expenditure are equal. 800 700 PE, (P = 100) 600 PE2 (P =120) 500 PE, (P =140) 400 PLANNED EXPENDITURES (Billions of dollars) 300 200 100 0 100 200 300 400 500 600 700 800 REAL INCOME (Billions of dollars)