The following economy maintains the following aggregate demand and aggregate supply schedules (Table below):

Aggregate

Quantity Demanded Price Level Aggregate Quantity Supplied32

3200 90 2750

3100 95 2900

3000 100 3000

2900 105 3050

2800 110 3075

Note: Quantities are in millions of dollars

(a)State the equilibrium output and price level? Give reason(s) for your answer. (5 marks)

(b)Suppose potential GDP was 3,075; is the resulting situation an inflationary or deflationary (recessionary) gap? Explain your response.(5 marks)