3. Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table. LO32.5 Amount of Real GDP Demanded, Billions Price Level

(Price Index)

Amount of Real GDP Supplied, Billions

$100 200 300 400 500 300 250 200 150 100

$450 400 300 200 100

a. Use the data above to graph the aggregate demand and aggregate supply curves. What are the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output?

b. If the price level in this economy is 150, will quantity demanded equal, exceed, or fall short of quantity supplied?

By what amount? If the price level is 250, will quantity demanded equal, exceed, or fall short of quantity supplied?
By what amount?

c. Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in the new aggregate demand curve as AD1. What are the new equilibrium price level and level of real output?