Table 7-1
Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.
-Refer to Table 7-1. What is the initial real GDP and price level?
A) Real GDP = 7.6 trillion; price level = 1.2
B) Real GDP = 7.6 trillion; price level = 2.8
C) Real GDP = 6.8 trillion; price level = 2.0
D) Real GDP = 7.8 trillion; price level = 1.0

Question

Table 7-1
  Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.
-Refer to Table 7-1. What is the initial real GDP and price level?
A) Real GDP = 7.6 trillion; price level = 1.2 
B) Real GDP = 7.6 trillion; price level = 2.8 
C) Real GDP = 6.8 trillion; price level = 2.0 
D) Real GDP = 7.8 trillion; price level = 1.0

Quizplus · Accepted Answer

The initial real GDP can be found where the aggregate demand curve intersects the short-run aggregate supply curve, which is at $6.8 trillion. The price level at this point is 2.0.

Table 7-1 Table 7-1 Shows the Aggregate Demand and Short-Run