LO9-5 On the graph on the next page, draw the AD and AS curves with these data that lead to a full-employment equilibrium:

(a) What is the full-employment equilibrium (i) Real output level?
(ii) Price level?
Suppose net exports decline by $150 at all price levels, but all other components of aggregate demand remain constant.

(b) Draw the new AD curve.

(c) What is the new equilibrium (i) Output level?
(ii) Price level?

(d) What macro problem has arisen in this economy:
unemployment or inflation?

Transcribed Image Text:

Price level 140 130 120 110 100 90 80 70 60 0 660 50 Real output Demanded 600 700 800 900 1,000 1,100 1,200 1,300 Supplied 1,200 1,150 1,100 1,050 1,000 950 900 800 1,400 1,500 600 400