The following table shows an aggregate demand schedule and an aggregate supply schedule.Which of the following is true?
Table 5.1
?
?
$1001501,2002001251,00040010080060075600800504001,00025200\begin{array} { | c | c | c | } \hline \begin{array} { l } \text { Aggregate Demand (quantity } \\\text { demanded in billions of } \\\text { dollars) }\end{array} & \begin{array} { l } \text { Price Level } \\\text { (\$) }\end{array} & \begin{array} { l } \text { Aggregate Supply (quantity supplied in } \\\text { billions of doll ars) }\end{array} \\\hline 100 & 150 & 1,200 \\\hline 200 & 125 & 1,000 \\\hline 400 & 100 & 800 \\\hline 600 & 75 & 600 \\\hline 800 & 50 & 400 \\\hline 1,000 & 25 & 200 \\\hline\end{array}$

A) Equilibrium output is $1,000,and equilibrium price level is 25.
B) Equilibrium output is $800,and equilibrium price level is 50.
C) Equilibrium output is $200,and equilibrium price level is 125.
D) Equilibrium output is $400,and equilibrium price level is 25.
E) Equilibrium output is $600,and equilibrium price level is 75.

Question

The following table shows an aggregate demand schedule and an aggregate supply schedule.Which of the following is true?
Table 5.1
?
?

1001501,2002001251,00040010080060075600800504001,00025200\begin{array} { | c | c | c | } \hline \begin{array} { l } \text { Aggregate Demand (quantity } \\\text { demanded in billions of } \\\text { dollars) }\end{array} & \begin{array} { l } \text { Price Level } \\\text { (\$) }\end{array} & \begin{array} { l } \text { Aggregate Supply (quantity supplied in } \\\text { billions of doll ars) }\end{array} \\\hline 100 & 150 & 1,200 \\\hline 200 & 125 & 1,000 \\\hline 400 & 100 & 800 \\\hline 600 & 75 & 600 \\\hline 800 & 50 & 400 \\\hline 1,000 & 25 & 200 \\\hline\end{array}

A) Equilibrium output is $1,000,and equilibrium price level is 25.
B) Equilibrium output is $800,and equilibrium price level is 50.
C) Equilibrium output is $200,and equilibrium price level is 125.
D) Equilibrium output is $400,and equilibrium price level is 25.
E) Equilibrium output is $600,and equilibrium price level is 75.

Vishal Satta · Accepted Answer

Final Answer : E, Explanation :  Equilibrium occurs where the quantity demanded equals the quantity supplied. At a price level of 75, both the aggregate demand and aggregate supply are 600 billion dollars, indicating equilibrium.

Definitions

Learning Objectives

Learning Objectives

Related questions