The following schedule provides information with which to draw both an aggregate demand curve and an aggregate supply curve. Both curves are assumed to be straight lines.
Average Price )Dollar per Unit).Quantity Demanded(Units per year)...Quantity Supplied(Units per year)
$1,000.......................................................................0..........................................1,000
100........................................................................900............................................100
1. At what price level does equilibrium occur?
2. What curve would have shifted if a new equilibrium were to occur at an output level of 700 and a price level of $700?
3. What curve would have shifted if a new equilibrium were to occur at an output level of 700 and a price level of $500?
4. What curve would have shifted if a new equilibrium were to occur at an output level of 700 and a price level of $300?
5. Compared to the initial equilibrium (a), how have the outcomes in (b), (c), and (d) changed price levels or output?