Aggregate supply and aggregate demand


Assignment:

Quantitative Literacy Assignment

Aggregate Supply &Aggregate Demand

Consider the table below for the aggregate supply and aggregate demand for goods and services in the United States.

 

Price Level - P

(Y Axis)

 

 

Real GDP Demanded in billions (AD)

 

 

Real GDP Supplied

 in billions (AS)

50

16,300

15,100

60

16,200

15,200

70

16,100

15,300

80

16,000

15,400

90

15,900

15,500

100

15,800

15,600

110

15,700

15,700

120

15,600

15,800

130

15,500

15,900

140

15,400

16,000

150

15,300

16,100

160

15,200

16,200

170

15,100

16,300

Use the following Table for Excel Graph's:

 

Real GDP

 in billions

 

Price Level - P

 AS (Y Axis)

 

 

Price Level - P

 AD (Y Axis)

 

15,100

50

170

15,200

60

160

15,300

70

150

15,400

80

140

15,500

90

130

15,600

100

120

15,700

110

110

15,800

120

100

15,900

130

90

16,000

140

80

16,100

150

70

16,200

160

60

16,300

170

50

Question 1. On the grid below, create a graph depicting the U.S. economy using the table above, andplotthe AD and the AS.(Use EXCEL to plot the graph on a separate sheet if possible, but not required. Use titles on
the graph, axes, and curves; USE X axis for Real GDP and Y axis for price level.).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 2. Explain using 3-4 well written sentences, two of the reasons the AD curve is negatively sloped. In your explanation, use numerical examples for the price level and Real GDP changes. In addition, using 2-3 well written sentences and numerical examples, explain one of the reasons that theaggregate supply curveis positively sloped in the short-run.

Question 3. Using the graph created from the data in the table, determine the short-run equilibrium price level and level of output. Explain using 2-3 well written sentences how this equilibrium point is determined and include the numerical values.

Question 4. From your graph, explain using 2-3 sentences how an increase in real GDPcould occur in the economy and give a specific written real world scenario or example. Include the resulting effect on price levels and give the correct terminology that corresponds to this type of price level change.

Question 5. On your existing graph, draw what would happen if : 1) crude oil prices fell slightly in addition to 2) stock and housing prices declined sharply. Explainthe result using 2-3 sentences and include numerical examples from your new graphical outcome. Compare the new position of theaggregate supply and demand curves, and the new short-run equilibrium compared to the old one.

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Microeconomics: Aggregate supply and aggregate demand
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