Use the following table, which shows the aggregate demand and aggregate supply schedule for a hypothetical economy, to answer the next question.Real Domestic Output Demanded (in billions)Price Level (index value)Real Domestic Output Supplied (in billions)$500350$3,5001,0003003,0001,5002502,5002,0002002,0002,5001501,5003,0001001,000If the quantity of real domestic output demanded increased by $1,000 at each price level, the new equilibrium price level and quantity of real domestic output would be ________.
A. 150 and $2,500
B. 300 and $3,000
C. 250 and $2,500
D. 200 and $2,000
Answer: C
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A. chronic B. cyclical C. structural D. frictional
Explain and demonstrate graphically the situation of an overvalued exchange rate in a fixed exchange rate system. What alternative policies are available to eliminate the overvaluation of the exchange rate?
What will be an ideal response?
The circular flow model shows that: a. households are on the demand side of the resource market
b. firms are on the demand side of both the product and resource markets. c. households are on the supply side of the resource market and the demand side of the product market. d. firms and governments are on the supply side of the loanable funds market. e. governments are on the demand side of the product market and the supply side of the resource market.
Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect the:
a. demand for honey to increase. b. demand for honey to decrease. c. quantity demanded of honey to decrease. d. price of honey to decrease. e. quantity demanded of honey to increase.